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Artificial intelligence is on everyone’s mind. 

And with good reason. We are currently in an AI technology innovation wave similar to the dawn of the consumer internet, the advent of mobile technology, and the rise of cloud computing. New businesses are emerging to provide AI models, developer tools to build them, and infrastructure to host them. Existing products and services will be enhanced by AI capabilities, while entirely new offerings will upset incumbents with AI as a key competitive advantage. 

At the same time, we also recognize that we are at the peak of a hype cycle—a moment that inflates valuations and calls for caution when it comes to investing in this market. 

At M13, we value clear-eyed evaluation of the emerging technologies reshaping the future of work, money, health and commerce. Below, dive into some of the key subjects we talk about when we talk about AI. 

Get in touch with our investors 

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Anna Barber, Partner
Interested in vertical AI, SMB workflow, commerce, AI guardrails.
anna@m13.co

Latif Peracha, Partner
Interested in AI for healthcare, vertical AI, AI infrastructure.
latif@m13.co

Morgan Blumberg, Principal
Interested in embedded AI, AI guardrails, productivity tools, AI infrastructure.
morgan@m13.co

Perspectives  

AI Fundamentals: What AI Really Does and Where We’re Looking to Invest
_{By Anna Barber, Morgan Blumberg}

A venture investor’s point of view on the AI wave.

AI Guardrails: How Enterprises Can Safely Adapt to the Generative AI Wave
_{By Anna Barber, Morgan Blumberg}

As AI adoption has exploded, companies are under more pressure than ever to figure out how to use this technology safely. We dig into key considerations and what questions companies need to be asking to prepare.

AI and the Future of Work
_{By Anna Barber, Morgan Blumberg, Matt Hoffman}

How we see jobs evolving in the era of AI—and the questions companies need to be asking to prepare for this sea change.

2023 Mid-Year Letter to Investors
_{By Latif Peracha}

Here are the tectonic shifts we’re paying attention to in the tech market—and how our investing philosophy fits in.

Our 2024 Predictions
_{By M13 Team}

From the maturing AI market to the workforce’s new normal, M13 partners share their top predictions for 2024.

AI Is Coming for Our Work. That’s a Good Thing.
_{By M13 Team}

Adobe’s Scott Belsky digs into what the proliferation of AI tools means for human workers.

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Recent investments 

Below are select investments from our AI portfolio. These are not inclusive of M13’s total investments; for more information, check out our portfolio.

Investing in Norm Ai: The First Regulatory AI Agent Platform
_{By Morgan Blumberg, Anna Barber, Latif Peracha}

Norm Ai agents are empowering compliance teams with autonomous context-aware compliance checks across increasingly complex regulation.

Investing in Polimorphic: Easing the Burden on Local Government Workers
_{By Latif Peracha}

M13 leads the seed round to a GovGPT solution to better connect local governments with the constituents they serve.

Investing in Carenostics: Empowering Clinicians with AI
_{By Morgan Blumberg, Latif Peracha}

M13 leads the $5M seed round for Carenostics, which deploys life-saving AI to diagnose and treat chronic diseases.

Investing in Canvas Medical: Reimagining the EMR for the Future of Healthcare
_{By Morgan Blumberg, Latif Peracha}

Canvas enables startups and established healthcare providers alike to launch new patient experiences and business models faster.

Investing in Pietra: The One-Stop Shop Helping E-Commerce Brands Grow
_{By Morgan Blumberg, Brent Murri, Carter Reum}

Pietra offers the critical infrastructure to start and scale modern e-commerce businesses.

Investing in Rebuy: Supercharging E-Commerce
_{By Jack Gorab, Brent Murri}

M13 is leading the $17M Series A for Rebuy, a data-driven personalization platform helping e-commerce brands maximize cart values.

When I first met Code founder and CEO Ted Livingston, in addition to his hearty laugh, the thing I was most impressed by was his ability to keep his same core team of nine together for a decade across multiple companies. It is a testament to Ted's leadership and vision as well as to the power of enduring relationships.

Ted has often been early. As a college student at Waterloo, he was part of the early days of BlackBerry (then known as Research in Motion). He went on to found Kik, the first chat app to reach over 100 million users. The messaging app had 40 million monthly active users at its peak and many consider it to be the predecessor to WeChat.

Since selling Kik in 2019, Ted and team have been working on their next act, in a space that’s been discussed for decades: micropayments.

Code is a new global payments platform that allows creators to earn money on anything they put online. The experience for both sender and receiver is seamless and instant, and Code allows people to charge as little as 5¢ per transaction. The system leverages self-custodial blockchain technology and is built on Solana.

Code makes it easy to make one-time, low-cost payments

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Existing payments apps are fragmented by use case (e.g., Venmo focuses on P2P, Stripe focuses on internet B2C, Square focuses on in-person B2C) and geography (e.g., Stripe in the US vs. Adyen in Europe). They are also subject to regulatory complexity that limits global functionality and leads to high fees.

We believe that Code has the opportunity to build a payments network that reaps the benefits of crypto—global by default, low fees, self custody, modular developer experience–while maintaining the benefits of traditional payment channels, such as privacy between parties and ease of use. We also think it has the team to execute.

For people that say crypto has not reached product-market fit, it’s worth noting that stablecoin volumes are outpacing Mastercard and Paypal, with a market cap of more than $135B. But it is true that there is not a magical product experience. We believe Code can provide that experience in payments.

Code has built its own L2 on top of Solana to ensure performance and security even when the network is most congested. This should give developers and their end users the most consistent, seamless experienceM13 has been actively investing in crypto and in the Solana ecosystem for several years, and our latest investment in Code fits squarely in our thesis.

Easy, global, instantaneous connections

×

Code is live today; download it at getcode.com. The team has also released a developer platform and will soon be launching a new blogging tool to empower anyone anywhere to get paid for their writing.

On the note of enduring relationships, it is always a great sign when your previous investors sign up for your next act. In this case, we’re thrilled to partner with Fred Wilson and Union Square Ventures as well as angel investors Balaji Srinivasan, Roham Gharegozlou, Anatoly Yakovenko, Raj Gokal, Mert Mumtaz, and more.

After a banner year for new AI applications, companies, and ideas, it’s almost impossible not to talk about artificial intelligence in this moment. While specific news stories come and go, there are a few fundamentals that won’t be changing in the near term.

At M13, we believe AI represents a true paradigm shift. As with the dawn of the internet, the rise of mobile, and the rise of cloud computing, this technology will usher in a fundamental change in the way software products are built and how we do our work. While to the average consumer AI may feel like an uncertain landscape, in ten years, it will just be another part of how we live our lives.

At our most recent annual general meeting, M13 shared our point of view on the AI wave: what it does, why it's having such a moment right now, and where we aim to invest.

What does AI actually do?

To anticipate how AI will change products and services we currently use, it’s useful to review AI’s core functions.

First, it predicts, looking forwards. AI is very good at parsing complex datasets to figure out what is most likely to happen next. The implications here span underwriting, investment management, inventory management, pricing, hiring models, and more.

Second, it infers, looking backwards. AI can assess complex data to answer questions about why something happened. We can apply this to areas from business intelligence (why did a customer make a certain purchase?) to medical diagnosis (why did a patient exhibit certain symptoms?).

Third, it generates. Especially in this era of widespread generative AI use, AI can create art, text, and video, with tremendous potential impact on marketing, sales, education, training, new product design, and more.

When you put these three functions together, you get automation. This function looks like AI agents that work alongside humans on things like customer services and sales, outreach, coding, personal CRM, and other exciting applications.

Why now?

AI is not a new technology, but 2023 did mark a new inflection point. There are a few reasons for this.

One is that foundational models have become usable out of the box for lay users. Open-source models trained on a large volume of information can accept real language queries, and we’ve seen the release of APIs built on top of these models that developers can use to more easily build new applications.

Technology advancements have also accelerated, making it cheaper to train models—according to Ark Invest, the cost of training a new model is declining each year by 70%. Training a new model is now within reach for your average company, or even your average independent developer.

Continued strong investment has also driven the AI wave. During a difficult time for fundraising, AI has remained a bright spot in the venture world. As a result, there’s been a steady stream of new AI product launches, keeping AI at the forefront of our attention. One year out from the launch of chatGPT, 6 in 10 US adults report being familiar with the technology.

News cycles have also played a role. Scott Belsky, who spoke at our 2023 Future Perfect conference, pointed out that if you’ve used an Adobe product in the last 15 years, you’ve already used artificial intelligence—you might just not have been thinking about it. Today, we see stories of AI plastered all over our newsfeeds, making it top of mind for consumers and CEOs alike and further driving trials for AI products.

Finally, large enterprises are taking notice and prioritizing AI in their strategic planning. Earnings call mentions of “generative AI” alone jumped 75X from Q4’22 to Q3’23 as executive interest in the area skyrocketed. Across Fortune 500 companies, 80% of surveyed CEOs said that they believe AI will increase efficiency and 75% said they believe it will automate manual operations in their business in the near term.

We’re seeing measurable economic impact of this technology. It takes developers 50% less time to code when they use GitHub Copilot. Knowledge worker productivity is projected to increase fourfold with the use of AI. These are real bottom line impacts. While there may be some speculation involved in how AI investing is rolling out, the excitement is driven by real impact.

Our approach to investing in AI

The AI tech stack includes infrastructure, orchestration, and application layers. We’re most interested in investing in the latter two.

Generally, we're looking for areas where AI technology offers a massive performance boost—10X improvement, not 10%. Where does it hugely surpass human performance? Where can business be built using proprietary access to data? And what new infrastructure companies will be needed to support the development of this entire ecosystem?

We believe this shift in technology positions startups at the application layer to compete with incumbents as they have the opportunity to build from the ground up on genAI. We are particularly excited about companies that can interact with end users using natural language and act as an interaction layer on top of traditional data structures. In time, we believe focused vertical solutions, especially those with access to proprietary data, will have the capabilities to fully automate workflows.

We have invested behind this thesis in the relationship management category with Hearth.ai, the document interaction category with Humata, and tax automation category with Workmade.

We believe for certain use cases developing a smaller, proprietary foundational model has advantages when coupled with an end-to-end customer solution. One such company is our portfolio company Norm Ai, building AI legal guardrails starting with regulatory compliance. Norm’s AI agent presents context-aware compliance checks that determine what marketing materials and disclosures may be problematic with which regulations. We believe that eventually Norm will be able to interact with AI agents conducting financial transactions, ensuring those agents comply with all relevant laws, policies and guidelines.

We realize the shifts in the way technology will be built will require new developer tools to support data curation, model training, fine tuning and observability. We are excited to watch this landscape evolve and support the tools that will build the software of the future.

As early-stage investors, the quality of a team is one of the most vital things we assess—and one reason we’ve been so excited to invest in AI is that this space draws some truly amazing founders. We’re seeing top minds coming out of universities teaming up with serial successful founders because they’re so excited about this technology, and former founders are getting back in the ring to see what they can build.

We’ll continue to share our perspective on particular aspects of the AI technology wave, and would love to talk to founders building at the application and orchestration layer.

M13 RocketGuides are interactive masterclasses in building your startup, from crafting an investor-impressing pitch deck, to designing beautiful landing pages, to writing clear and actionable investor updates.

Written by our expert operators, investors, and former founders, these guides include in-depth insights and best practices to help your company shine. Dive into our first two guides below.

M13's Guide to Strategic Conferencing in 2024

Conferences present a huge opportunity for networking, fundraising, showcasing your product, gleaning insider insights, and much more. They can also be chaotic, overwhelming, and expensive.

If you’ve wondered: Should I be going to conferences? Which ones? How do I find them? How do I make the most of my time there? Then our RocketGuide to Strategic Conferencing—featuring M13’s Conference Finder Tool—is for you!

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Highlights:

• “Pitching investors? Consider creating a data room specifically for the conference, with links to your deck, product demos, and testimonials. Prospective investors you meet can share the link with anyone on their team and you can set up unique link tracking to understand views and engagement." —Amelia
• “Be a good (and strategic) host. Identify great partners and sponsors to add to the network you can bring together, and keep close track of the overarching event schedule—both the conference and offshoot events—to choose an optimal time for your own event." —Melissa
• “Introvert? You’re not alone! Up to 40% of the population needs some solo time to energize. Figure out the 1–3 things that will re-energize you while you’re in the thick of it. AM meditation? 30-minute workout? Favorite B-vitamin supplement from home? Plan these in advance so you know your cup will be filled." —Lizzie

Our conference guide experts:

Lizzie Francis, M13 Partner & Head of Propulsion; Mary Lara, Director of Product; Samantha Hughes, Community Program Coordinator; Melissa Montan, Director of Propulsion; Rob Smith, M13 Partner & Head of Product; Amelia Zack, Portfolio Operations Analyst

M13's Guide to Building Your Early-Stage Fundraising Deck

Raising a seed or Series A round? Our comprehensive guide walks you through every. single. slide. your potential investors will want to read, from introducing an interesting problem you’re solving, to a strong product roadmap, to defining key metrics for your startup’s success.

Or check out the full deck below:

Highlights:

• “Investors can be lazy. If they only read the titles of your slides, that should be enough to tell your startup story.” —Rob
• “Twist the knife on your problem slide. Start with a problem, then highlight what makes it even worse. Use action words; be declarative.” —Anna
• “Financial projections should be optimistic but realistic. Make sure you understand what “good” looks like, and highlight that on your financial forecast slide.” —Karl

Our fundraising deck experts:

Karl Alomar, M13 Managing Partner; Anna Barber, M13 Investing Partner; Rob Smith, M13 Partner & Head of Product

Stay connected:

Sign up for exclusive early access to future M13 RocketGuides

Recent studies have found the number one reason startups fail is improper product-market fit. The second leading cause? Poor marketing strategies and execution—meaning that your brand communication strategy is a vital part of any go-to-market plan.

How you communicate with your customers, partners, and the media is crucial to establishing your brand reputation and community. For founders interested in sharing a fundraise announcement, amplifying their startup’s accomplishments, or sharing their expert opinion on a trending story, reporters are a vital part of that community.

“Phrases like ‘get us PR,’ ‘secure placement,’ or ‘place a story’ are misleading and outdated ways of thinking about the brand comms flywheel,” says M13 Partner and Head of Brand Christine Choi. “It really starts with humans and the stories that interest us. Reporters are people too—and tech media are important stakeholders to build relationships with as you build your brand.”

At our recent Ask a Reporter Anything event in New York City, Christine sat down with TechCrunch reporter Dominic-Madori Davis to talk about best practices for founders interested in building relationships with reporters.

Here are some of the takeaways from the conversation—starting with some missteps to avoid.

Don't

Pitch reporters who don’t cover what you’re pitching. Before you pitch someone, you need to know what types of stories they write. A reporter who never writes funding announcements probably isn’t going to start with yours. Notably, it’s rare for reporters to cover product announcements (vs. fundraising announcements). Help the reporters in your network by only sharing relevant, newsworthy stories.

Overlook social media. Many reporters are active on social media and find sources and stories through channels like LinkedIn and Twitter. Follow reporters who cover areas relevant to you on their social platforms and engage when you see something interesting. Communicating over these platforms can also help you avoid getting lost in someone’s busy inbox (Dominic shared that she has 71,000 unread emails). And keep your own social media channels up to date—reporters will check out your product and ideas on social as part of their research.

Cross boundaries trying to get ahold of a reporter. Communication is positive; badgering is not. Don’t spam journalists with messages or reach out through inappropriate channels. “I had a founder contact my family,” says Dominic. “That’s really scary. Reporters get harassed a lot too, especially women journalists—someone will send hundreds of messages across multiple platforms. Don’t do that.”

Request headline changes or edits after publication. If you do have a reporter write a story about you, be generous about the final piece. Generally, reporters don’t write headlines; editors do—and arguing over a published headline is a waste of time. It’s also rare to update a published story unless there’s been a flagrant error, so best practice is not to bombard reporters with edit requests for a published story. “When we issue a correction, it has to be updated on news wires all over the world. Something has to be absolutely incorrect. If a story isn’t incorrect and you just don’t like it, that’s not enough to tell Apple News about.”

Do

Remember that reporters are real people. If you haven’t worked with the press before, the stereotypes around the media can be daunting—and it’s important to remember that reporters are also just regular people doing their jobs. “We treat the media as a relationship, because reporters are real humans,” says Christine. “We chose to host this event partially so founders could have the experience of meeting a real reporter who they will likely have to pitch.”

TechCrunch Reporter Dominic-Madori Davis shares her experience at M13's 'Ask a Reporter Anything' event.

Norm Ai COO Patrick Vergara with M13 Partner & Head of Brand Christine Choi at the event in NYC.

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‍Build social relationships. You don’t need to have a fundraise to announce or story to share in order to engage with reporters; you can start these relationships just by reading their work. “A lot of the founders that I’ve taken note of weren’t pitching me—they were just people engaging naturally with my work. And when you do that over and over again, you put yourself on the radar, so when you do have a story, I want to know what it is.”

‍Offer to be a source. Even if a reporter passes on a pitch or can’t cover your company specifically, they’ll still often use you as a source. Offering to weigh in as an industry expert can give you a different type of coverage, while also helping out the reporter as they write their story.

‍Stay informed. “I like to follow what’s happening in Congress and seeing how that relates to startup founders,” says Dominic. “When Roe v. Wade was overturned, I wondered: what does that mean for women founders in certain states? Those are the stories I find interesting.” Staying on top of developing news stories and trending conversations can help you shape your own story to be timely and relevant.‍

Grow together. Just as your company will grow and develop over the years, reporters’ careers grow across outlets and coverage areas. It’s important to remember that these are ideally long-term relationships, not just one-story interactions. Dominic explains, “I’ve been covering one founder’s company for years now, at two outlets: Business Insider and now TechCrunch. I think that’s the best part about working with early-stage companies: you get to grow with them over the years.”

Today, Built In honored M13 in its 2024 Best Places To Work Awards. As a bicoastal firm, we’re proud to share that we rank in both Los Angeles and New York City.

At M13, we believe that we’re brighter together—and that our people are at the center of our success.

“Many VC firms don’t focus on culture in the way we do at M13, and so it’s fairly unique for a VC to be recognized for that,” says Matt Hoffman, M13 Partner and Head of Talent. “We credit much of our success in this area to the operating experience our partners bring to the team, where we’ve learned the value of a strong developmental mindset in driving performance.”

In turn, our strong culture propels our strategic vision. “Nobody wakes up at M13 not wanting to achieve great things,” says Carter Reum, M13 Partner and Co-founder. “We want to create a new, innovative model that is talked about for decades to come.”

We asked the team to weigh in on what makes M13 a great place to work, from their favorite parts of M13 culture to how they feel supported in life beyond the office. Here’s what they had to say.

What is the best part of working at M13?

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All voices are heard. I’ve never been afraid to speak my mind or contribute my opinions, and as a result, I’ve been able to have a greater impact through my work here and develop more as a professional than I would be able to anywhere else.

— Sarah, Talent

People at M13 are allowed—and in fact encouraged!—to experiment. We are always striving for better ways to work, collaborate, and provide value to our portfolio of startups. It’s a great place to try throwing different things at the wall to see what sticks.

— Melissa, Propulsion

The humans! Not just the quality of our team, but the diverse backgrounds and experiences that each contribute to making M13 what it is.

— Andrew, Launchpad

It's easy to feel engaged when you're working in an environment where intellectual curiosity is valued. The group collectively puts a lot of time and effort into understanding future trends.

— Mark, Investing

The people, the collaborative culture, and the collective effort to continually improve. M13 is a community of incredible people who make coming to work every day a true privilege. I am lucky to work alongside people who trust me, uplift me, challenge me, and inspire me.

— Julie, Talent

It's rare to find a combo of doing what you love with people you love doing it with. I've found that at M13, and I want to spend my career using this platform to invest in great entrepreneurs and leaders.

— Brent, Partner

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A culture of teamwork, learning, and gratitude

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M13 really fosters a culture of learning and openness. There’s no attachment to “the way we’ve always done things,” so new ideas are embraced. M13 creates space for people to do their best work and stretch themselves. I’m excited to go into the office every day and learn from all my colleagues—I get so much energy from working with a talented team that really cares about the founders we serve, about our company, and about each other.

— Anna, Partner

M13 has a culture of appreciating all the contributions of all our various team members on a daily and weekly basis. Everyone works hard and has high bars of excellence, yet the firm’s culture is one that causes people to pause and express gratitude to others along the way.

— Carter, Partner & Co-founder

Firms often tout their “smart, collegial culture,” but M13 really is a place where teamwork is the most important cultural quality. M13 truly facilitates a culture in which a rising tide lifts all boats.

— Sarah, Partner & Head of Investor Relations

The beauty of our workplace lies in its unwavering commitment to collaboration. M13's incredible talent is composed of individuals who are committed to excellence on the individual and collective scale. Every voice is not just heard but celebrated—a testament to our belief that we are #BrighterTogether.

— Jennifer, Investor Relations

M13's shared mission is not only to empower our portfolio companies, but to create a gratitude-driven culture where we are valued as individuals and motivated to do our best work. It's truly a space where I feel encouraged to innovate and take calculated risks, knowing I have unwavering support from my team. I'm incredibly thankful for the genuine human connections that define M13, making it an extraordinary workplace where we collectively thrive.

— Mary, Product

M13’s LA headquarters and NY office are designed for gatherings, connection, and inspiration as much as they are for heads-down work. The play and joy in our staff retreats nourish bonds that make remote collaboration so much better. And every day we learn from our colleagues, whether they graduated from college two or 20 years ago. That learning mindset keeps us evolving and experimenting in times of change and uncertainty. It’s always about the people, and we are very proud to nurture a culture that attracts the best.

— Christine, Partner & Head of Brand

M13’s culture of gratitude motivates me to do my best work. Whether one-on-one, in Slack, or in all-hands team meetings, gratitudes are common, and they energize everyone to give their best while enjoying the ride.

— Michael, Data

Everyone here is such a great human being with a genuine heart. This is not by accident! The strength and power of “one team, one dream” is not only felt but actively discussed and pursued. I am consistently thankful for not just my immediate team but the entire team working and supporting each other to do our best work.

— Abigail, Brand

M13 is a greenhouse for innovation and entrepreneurship. I take pride in being part of a company that not only invests in visionary companies, but actively reflects and celebrates that same entrepreneurial passion within our organization.

— Amelia, Propulsion

Community beyond M13

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Everyone here brings energy and enthusiasm to their work, and it’s exciting to see everyone leverage their experience and knowledge to support each other and our founders and their teams. Our common love for founders and the journeys they are on keeps me engaged and inspired.

— Loren, Talent

M13’s annual Brighter Together Week is a true embodiment of our commitment to fostering community both internally and externally. This week of events brings together our community members from all different backgrounds and provides unique opportunities for direct connections between the M13 team, founders, and investors.

— Carly, Brand

The sense of community here is remarkable, and getting to collaborate and work with everyone here is such a rewarding feeling.

— Arbo, Talent

Support at work and beyond

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During the pandemic, M13 came together to ensure each of us, and our families, were supported in every way. With great intention and planning, the firm’s Mission Control team created a cadence of virtual events, check-ins and programming, centered around our M13 core value of Community, to ensure we were connected, collaborative and #brightertogether. Partners, children, pets—all were welcome. This human approach to life during an unprecedented moment in time embodies the generosity of spirit and caring that is a hallmark of our firm, and it continues to this day.

— Lizzie, Partner & Head of Propulsion

I’m given the room and the support to tackle really challenging problems. I grew twice as much in my first six months at M13 than I did in two years in a previous position, because I am trusted and encouraged to learn by doing.

— Samantha, Community

My colleagues truly support my growth, curiosity, and development. In my day-to-day work, this means giving me opportunities to work on new projects, space to share and develop my ideas, and access to the tools, resources, and team expertise I need. Beyond work, M13 has offered me the flexibility, support, and cheerleading to continue my education. I feel that my growth as an employee, a student, and a person is truly valued here.

— Emma, Brand

About M13

M13 is an early-stage (seed and Series A) venture capital firm that invests in visionary founders building disruptive software businesses. Established in 2016 with offices in Los Angeles and New York, the firm is a full-stack partner that brings its deep bench of full-time operators to help founders outperform and build category-defining companies. M13’s portfolio includes more than 200 direct investments, with 25 exits to date. The firm has seeded seven companies and been in the Series A of five others that went on to achieve unicorn status.

About Built In

Built In determines the winners of Best Places to Work based on an algorithm, using company data about compensation and benefits. To reflect the benefits candidates are searching for more frequently on Built In, the program also weighs criteria like remote and flexible work opportunities, programs for DEI, and other people-first cultural offerings.

2023 was a year of juxtapositions, as bleak macro signals contrasted with bounding optimism around tech breakthroughs. Exits slowed, generative AI skyrocketed, and startups navigated a knotty fundraising landscape.

Below, M13 partners share the industry trends, investment areas, and pendulum swings we’re paying close attention to in 2024. Highlights include:

Read on for more predictions and in-depth insights into the year ahead.

Artificial intelligence trends

The year of guardrails
Anna Barber, Partner

While 2023 was the year AI adoption and experimentation exploded, this year I’m watching what we call AI guarrails—platforms that help companies and consumers use AI in a safe way. Whether it’s protecting personal data, understanding how a model produced an answer, or ensuring compliance with laws and regulations, this will be a big area for investment in the next year.

AI transforms healthcare
Latif Peracha, Partner

AI will be the technology that finally gets us to the promised land of digital health and value-based care, improving outcomes and ripping inefficiencies out of the system. In 2024, we will see major breakthroughs in areas such as improved diagnosis, early detection, and personalized treatments. Notably, while a lot of people think the ultimate AI hub is San Francisco, we are seeing a nexus of great founders in New York building in AI.

Infrastructure & orchestration layers become interesting investment areas
Karl Alomar, Partner

AI has already begun changing the world but, as with web3 and other disruptive technologies, we are being cautious as to how we find strong foundational businesses that fuel this market. By segmenting the category, we are able to move down from the obvious application layer and focus on infrastructure and orchestration layers to identify where the tooling for this industry will live. We seek solutions that allow for the widespread use of AI across the developer ecosystem or within specific industries as the technology leap continues.

AI doesn’t mean job loss
Matt Hoffman, Partner & Head of People

I do not predict a significant loss of jobs due to AI in the near future. In fact, most similar technological trends are usually accompanied by a net gain of jobs.

Right now, the best use cases for AI still seem to be in the “copilot” role, rather than fully owning tasks. That means AI works best when it is guiding humans to do their work better, more efficiently, and more thoughtfully. As the technology gets smarter, it will free up time working on rote tasks and create more space for complex creative work. I expect peoples’ jobs to be safe for at least a little longer—and they are likely to be more engaging and satisfying to boot.

Two sides of AI-powered marketing
Brian Carroll, Partner & Head of Finance

As companies leverage generative AI for localized, multi-lingual, and demographic-specific images and ad copy, mass personalized ads will provide a major boost, especially to DTC brands.

At the same time, as AI-generated content and algorithmic feeds continue to flood social media, there will be a backlash in favor of authenticity and human curation. Generative AI tools made it easy to produce content, and speed and quantity of content are no longer meaningful differentiators. Consumers will increasingly value personality, realness, and the stories behind a piece of content. There’s a reason that Merriam-Webster's Word of the Year for 2023 was “authentic.”

AI markets self-regulate
‍Win Chevapravatdumrong, Partner & Head of Legal

AI development significantly outpaces governments’ ability to regulate, and that will be particularly true in an election year. Since we don’t expect regulation or court decisions to make any noticeable impact on AI markets or progress of innovation, we expect the markets to find ways to self-regulate. Examples include responsible AI development, continued innovation in AI privacy and security, and startups focused on IP monetization in AI environments.

The creative community will also begin to embrace AI through partnerships and innovation. Similar to how the relationship that the creative community had with UGC platforms evolved in the late 2000s and early 2010s, the creative community will begin to find ways to work with AI (establishing new norms around market pricing and structures along the way) and move on from the fear and lawsuits that we saw in 2023.

Proactive care meets AI
‍Courtney Reum, Partner & Co-founder

Last year we saw a big focus on the impacts of AI on productivity in the workplace. In 2024, we’ll see the impact of AI at a more personal level, as people leverage AI to proactively take care of their health and wellness.

AI assistants can help lighten the cognitive load of daily administrative tasks, while AI-powered tools like fitness trackers can continuously collect data (e.g., sleep tracking, heart rate) to help consumers make more tailored decisions about their health. For care providers, healthcare AI companies like Carenostics will use AI to prompt more effective interventions earlier.

Authenticity beyond GPT
‍John Tabis, Partner & Head of Launchpad

LLMs have become all the rage in 2023.  But text, image, and video creation will become table stakes for all businesses in 2024. Differentiation will come when companies and brands learn to harness the power of these tools in an authentic manner to deliver value beyond the GPTs of the world—that will be the real proving ground for AI in the medium term.  

Investment & exit trends

Focus on profitability over fundraising
‍Brent Murri, Partner

In 2024, the traditional venture path of Series A to B to C will look very different. Founders will abandon growth at all costs, stretch their dollars further, and consider the trade-offs between breakneck growth and reaching profitability.

We're already starting to see founders deciding between getting to profitability and raising a new round of capital, a luxury many startups have previously not had. Companies may grow more slowly, but raising less aggressively means being less beholden to investors—and more in control of their own destiny—when it comes time to exit.

A recent example of this new profitable growth blueprint is Klaviyo. It debuted on the public market at a $9B market cap, after having burned only $15M net cash to get there. It took the company 11 years to IPO, but shareholders didn't experience the same dilution as other tech IPOs.

M&A activity recovers from recent lows
‍Win Chevapravatdumrong, Partner & Head of Legal

M&A activity slowed down considerably in recent months due to the high cost of capital, macroeconomic uncertainties, and, to a lesser extent, heightened regulatory scrutiny. As we start the new year, activity will pick up. This feels like the end of the rate hiking cycle, leading to less uncertainty in the debt market. PE investors and larger companies have dry powder waiting to be deployed, and smaller startups that have struggled to fundraise the past few years may see M&A as their only alternative.

AI acquihires on the rise
‍Rob Smith, Partner & Head of Product

M&A—and specifically AI acquihires—will pick up in 2024. As AI talent needs skyrocket and supply lags, acquihires for good AI teams will start to happen more frequently and competitively. This mirrors the acquihire booms that followed approximately 1–3 years after rises in machine learning and mobile apps during their ensuing talent shortages.

Venture trends toward “barbell investing”
‍Anna Barber, Partner

Right now, we are seeing our VC peers commonly employ two strategies: (1) investing earlier than they normally would, given public market multiples that make Series B or even A rounds challenging; and (2) paying a premium for a quality team in a big market. This results in a “barbell effect” in the early-stage funding market.

In 2024, we expect to see the seed market stay strong and healthy, with lots of competition, and we anticipate high prices for companies with large markets, strong teams, and true Series A traction.

Efficient growth > raw growth
‍Rob Smith, Partner & Head of Product

Growth has become secondary to unit economics and paths to profitability. In 2024, a new, revamped "efficient growth" metric will become the new holy grail for early-stage startups. A stat like 3X year-over-year efficient growth will be looked at more favorably than capital-intensive 5X growth in many sectors, including AI.

Workforce trends

GenX’s unique leadership style enters the C-Suite
‍Christine Choi, Partner & Head of Brand

GenXers (currently 43–58) are now aging into leadership roles. As the smallest and often overlooked generation, GenXers possess the resilience, responsibility, independence, and some of the baggage (rebellious, doesn’t like to let anyone down) of the middle child.

As self-aware architects of Web 1.0 and 2.0, GenXers are at once tech-forward leaders of the digital native workplace and cautious about unintended consequences, and will find ways to keep humans in the loop without slowing down innovation. GenX leaders will also adopt a pragmatic and unfussy integration of social responsibility, ESG, and sustainability, unceremoniously integrating diversity and inclusion initiatives to achieve measurable business outcomes.

As the original latchkey kids, GenX had to be adaptive, resourceful, and productive without supervision—and expects this from others as well. In turn, this generation balances listening (an essential skill for leaders) with pragmatism, which translates to an inclusive culture and flexibility as long as teams meet their high expectations. GenXers are used to highly dynamic times and paradoxical demands. There is no better time for GenX’s excellent adventure in the C-suite.

More hiring, more hybrid, less office space
‍Matt Hoffman, Partner & Head of Talent

We’ve seen the worst of the layoffs wave, and across our broader portfolio, we are seeing many more companies hiring than reducing headcount. My expectation is that most of the new hires for 2024 will be focused on building to start—engineering and product primarily—with sales and marketing to follow.

As companies navigate return to office, the clear winner is hybrid working. Most companies are actively encouraging their employees to work out of a central location 2–3 days a week. This allows workers to have the flexibility they need to manage the balance between personal and work responsibilities, avoid unnecessary long commutes, and still find ways to connect with colleagues and clients in person.

Similarly, I am noticing more companies significantly decrease their office footprint as leases come up for renewal. I expect this trend to continue, with the office environment continuing to move towards purpose-built use cases.

Industries to watch

Growing investment in carbon markets
‍Karl Alomar, M13 Partner

I have taken a keen interest recently in carbon economics and the carbon industry as a whole. It seems increasingly necessary for humanity to take stock of our impact on the planet, and governments and corporations alike seem to be moving more towards carbon-neutral solutions. Technology will likely fuel this current, and investment appetite here is growing. At M13, we have invested in and continue to look for businesses that will contribute to this carbon economy.

Crypto’s quiet comeback
‍Latif Peracha, Partner

We’re already seeing quiet recovery signals in the crypto market (regulatory changes, asset pricing) post the 2022 crypto apocalypse. In 2024, we will have our first breakthrough crypto app launch that will be used by tens of millions of users—except we won't recognize it as a crypto app, as it will rival the user experience of any current web2 application.

Cybersecurity rules
‍Win Chevapravatdumrong, Partner & Head of Legal

2024 will see continued focus on and innovation in privacy and cybersecurity. The combination of recent regulatory focus (e.g. FTC, SEC, new state legislation) on privacy and cybersecurity and a heightened need to maintain privacy and security standards in a rapidly changing AI landscape will continue to place additional demands on these functions. In turn, we’ll see more investment and hiring in privacy and cybersecurity, as well as continued innovation and an expanding vertical SaaS industry focused on these areas.

At M13, we’re really proud of our intern program. Our interns get to do meaningful, hands-on work with partners, work directly with founders, help source and close core investments, and hang out with celebrities.

It’s a pretty good gig.

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M13 interns visit with a founder.

M13 interns tour a portfolio company's offices.

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As we’ve refined our internship program over the last few years, we’ve learned a lot about what makes for a good experience on both sides. Below, we highlight some of the best practices to set up a successful program.

I can't recall the last 10-week period where I've learned as much as I have [at M13]. From my very first day, the investment team armed me with the tools, mentorship, and support to succeed.
Antonio Calderon, MBA Investment Associate Intern

Before the internship

Align on the details. Recruiting for an intern program is different from most hiring processes, which are more flexible about start date and location. Before jobs are even posted, align with hiring managers, recruiters, and internship facilitators to agree on salary, location, and program dates.

Consistency makes for a better experience, both for interns and employers. Our Diversity & Inclusion Recruiting Checklist can help you integrate diversity, equity, inclusion, and belonging into your hiring processes early on.

Decide: graduating vs. non-graduating? As part of the alignment process, determine the profile of intern that best fits your program’s goals. Do you want to hire students who will be returning to school at the end of their internship, or do you want to hire graduating students?

While students who will be returning to school won’t be immediately able to join in full-time roles, they can help spread your employer brand within their network, organically growing your talent network. Even if your interns don’t end up joining your organization full time, a positive experience can prompt them to share your brand with their communities, universities, and personal networks.

Students who are graduating are more likely to desire a full-time offer at the end of their internship. If you know there will be no possibility of a full-time position later on, make sure to be transparent with the candidates during the hiring process. If there is potential for a more permanent role down the line, an internship could provide a good trial period and exposure to your company.
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M13 interns on a team-building excursion to Paramount Pictures Studios.

Interns on a hike overlooking LA.

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Post jobs early. Many students begin looking for summer internships as early as December or January. The earlier you post, the more competitive your program will be—and the more talent you’ll have available to you!

Pay your interns. These days, it’s more common than not for interns to be paid for their work. It’s a competitive landscape for talented people, especially MBA interns. Competitive payment can make your program enticing to top talent.

It’s important to create a similar compensation experience across your intern cohort; having some interns be paid and others getting course credit can result in an awkward dynamic. Align on compensation and communicate about it early in the recruitment process.

Being part of an intern cohort was so special—we were able to really bond, get to know other teams even better, and learn so much more than on our own.
Mimi Pham, Talent Operations & Analytics Intern

During the internship

Set up core projects. At M13, we’ve had success in centering internships around a Core Internship Project—a long-term impact project that interns present at the culmination of their internship.

These projects help interns focus their experience and help employers structure interns’ time into key deliverables. It also gives interns something tangible to include in their own portfolio, resume, and future job interviews.

Some projects may be apparent before an internship begins, while others will start to take shape in the first few weeks as hiring managers better understand interns’ strengths and interests. We recommend looking for cross-functional projects that allow interns to work with as many people as possible.

Some of our recent Core Internship Projects have included deep dives into investment thesis areas and creating a module for go-to-market product launches for our portfolio companies. We’ve also had interns write blog posts, such as From Web2 to Web3: What E-commerce Founders Need to Know and 9 Common Hiring Bias Pitfalls and How to Avoid Them.

Touch base regularly. Even if interns are part of different teams, it’s useful to have them come together as a cohort. Set up regular touch bases for interns to ask questions, share what they are working on, and raise any struggles or roadblocks.

We highly recommend offering in-person time in the office where possible. If no office is available, try to have an in-person event—ideally a couple days long—with hiring managers and the full intern cohort. This will let you give interns the full cultural experience of your team and get to spend time with each other in a non-work environment

Some of our “extracurricular” activities with interns have included floral design classes, hikes to Los Angeles monuments, Benihana-esque hibachi dinners with Paris Hilton, and tours of some of our portfolio companies’ headquarters.

For me, intern dock-in week was the highlight of the summer. I loved the opportunity to deepen relationships with the other interns and the rest of the M13 team through thoughtful, fun activities.
Andrea Moreno Zepeda, Launchpad Intern 2023

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M13 interns and team members enjoy a unique dining experience at our co-founder Carter Reum’s house.

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Support career development and mentorship. Allow interns to connect with senior leadership, even those they don’t work with directly. This will help them broaden their network and access to future opportunities, as well as to gain new career perspectives.

Internships offer invaluable time for career exploration. Setting aside dedicated time to discuss career paths and opportunities is time well spent, both for interns shaping their careers and for companies assessing interns’ skills and interests.

Mentorship pairings are a great option for supporting interns’ career growth and for helping full-time employees gain valuable people management experience.

Our most recent class of M13 interns met with some of our founders—including Michael Chime, CEO of Prepared—during their program.

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Stay in touch. At the end of the internship, encourage your interns to add employees on LinkedIn and keep in touch with the people who have shaped their experience. An internship is often the start of a long-term relationship that can span companies and careers, and it can prove valuable to both employers and interns long after the experience has ended.

Thank you to our many wonderful interns who have made M13 a special place to be!

Join our community:

Interested in internship opportunities with M13 or our portfolio companies? Keep an eye on our careers page for the latest openings across our galaxy! We will begin recruiting summer 2024 interns in Q1 2024.

The abrupt and headline-making removal then reinstatement of OpenAI CEO Sam Altman—falling around the one-year anniversary of the release of OpenAI’s defining product, chatGPT—makes now a prime moment to reflect on the whirlwind past year of AI innovation.

In that time, we’ve witnessed a Cambrian explosion of AI tools, companies, and conversations, with generative AI projected to add $4.4 trillion to the global economy as automation boosts productivity.

Alongside this feverish activity, there is a deep need for guardrails built on legal, security, technological, and ethical considerations surrounding AI. As both new and established players enhance their AI offerings, companies with thoughtful guardrail strategies will be better positioned for long-term success than those flying fast, but blind.

At M13, we seek to understand the mechanisms, benefits, and risks of this technology, and to balance these perspectives in crafting our AI portfolio. Whether it’s protecting personal data, understanding how a model produced an answer, or ensuring compliance with laws and regulations, AI guardrails are a major consideration for us—and we see it as a key investment area today and in the future.

What will it take for enterprises to successfully adopt this new wave of generative AI technology? Below, we highlight some of the topics we’ve been thinking through—and the questions companies should be asking—as we navigate this bold era of AI.

The stakes are higher for enterprise

The use of AI comes with higher stakes for enterprises than for individuals, and for companies using this technology, proper guardrails will be crucial.

We like to compare AI adoption to the example of self-driving cars. Culturally, we ask for perfection from self-driving technology, and we can’t accept anything less, even though we do accept that human drivers will make mistakes. While we can accept that humans are fallible, there’s a feeling that technology can achieve perfect adherence to rules and guidelines.

Similarly, it makes us uncomfortable to accept a known failure rate from an AI agent—even if the failure rate is lower than what we typically see with human actors.

When a human employee makes a mistake or creates a bad outcome, that error is often seen as unique to that person and limited in impact radius. If an AI agent creates a bad outcome—mismanages a client’s money or recommends a poor treatment plan to a patient—it becomes a systemic issue, one that can implicate an entire company. The company as a whole is deemed responsible.

Consumers, regulatory bodies, and public opinion are less tolerant of AI failure than human failure.

Market map: AI enterprise requirements & guardrails

Below, we identify some of the startups and incumbents that enterprises are turning to in order to protect their data, ensure regulatory compliance, and better understand and optimize safe model outputs.

As investors, we are very interested in meeting companies focusing on end-to-end solutions to enable safe, flexible, and accurate usage of generative AI capabilities. We are also interested in how enterprises will solve concerns around IP infringement, especially in the creative world.

Note: This map is not exhaustive of ML Ops across data, training, observability, and deployment. It is meant to be illustrative of players most focused on guardrails and enterprise security.

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Are you building in this space, or do you want to be included in our market map? Reach out to anna@m13.co and morgan@m13.co.

Data security & protection

There is a core risk in managing the inputs to generative AI applications, and it’s important to consider the data security of confidential customer data. Already, many companies—including Microsoft, JPMorgan Chase & Co., and Apple—have created strict policies against sharing any customer data with outside genAI tools.

OpenAI is working to create data safeguards around the use of its tools. Still, it is likely that companies in highly regulated industries will need to employ data masking strategies by leveraging systems like Liminal.ai, Kobalt Labs, Credal, Presidio, and others, in order to use external models to generate AI outputs.

At M13, we’ve experimented with AI tools to create images for blog posts, take notes for certain meetings, and draft social and marketing copy—but our policy cautions against uploading sensitive proprietary information to genAI tools or using them to write content that requires deeper fact checking.

Questions companies should ask:

Levels of risk

Accuracy of output is an important consideration when it comes to generative AI tools, and soundly analyzing the level of risk that automation poses at large is crucial for developing a reasonable AI strategy. Within an industry or even within a type of task, different circumstances and processes will carry different levels of risk.

For example, take AI identification of images. Societally, we’re generally accepting of a photo app that fails to perfectly identify every picture of our friend in our camera roll—but we have low tolerance (and high penalties) for self-driving cars that misidentify pedestrians and potentially put them in harm’s way.

Below, we highlight some higher- and lower-risk processes to consider across industries. While this list is far from exhaustive, it does help illustrate how companies can begin approaching risk categorization:

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Questions companies should ask:

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Navigating the legal & regulatory landscape

Government and regulatory oversight of AI is heating up. In October, President Biden issued a landmark executive order calling for “safe, secure, and trustworthy artificial intelligence,” and last month the United States joined 30 other nations in agreeing to set guardrails for military AI in the first major international agreement of its kind. The EU also recently agreed on a draft for the AI Act, the first major piece of AI legislation.

In the prelude to Biden’s executive order, top AI companies—including Amazon, Google, Meta, Microsoft, and OpenAI—met and agreed to protect users through a series of cybersecurity and data transparency commitments. These voluntary commitments have so far focused on informing users about how data is used and keeping personal data secure, rather than commitments not to use data to train models or any warranties about the quality of outputs of AI models.

Regulatory concerns are not preventing the use of AI. A recent liminal.ai survey of workers across five heavily regulated industries (banking and finance, insurance, biotech and life sciences, manufacturing, and healthcare) found that two-thirds of respondents used generative AI tools on a weekly basis, and 90% agreed generative AI was at least somewhat valuable in helping with their work. Only 26% reported being fully prevented from using generative AI tools at work.

We expect to see significant movement in these results as more companies implement AI policies and roll out AI security tools.

Questions companies should ask:

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Ownership & copyright

Ownership and copyright are crucial issues when it comes to genAI output, and we are a long way from resolution.

It’s certainly a topic on many creators’ minds: the tentative billion-dollar contract to end the months-long SAG-AFTRA strike includes provisions to “protect members from the threat of AI.” The deal that ended the Writers Guild of America strike prohibits studios from using generative AI to write or rewrite literary material or to require writers to use the technology.

Do the original authors of works used to train AI models have a stake in what those models generate? If so, how should that ownership stake be calculated? Do the prompt generators own the outputs that they generate, and how would such ownership be claimed?

One can imagine the US Copyright Office and USPTO being overrun with registrations, claims, and challenges to copyright as well as patent and trademark claims. An author might be satisfied seeing their name in a footnote or the acknowledgements section of a book or research paper without expecting compensation. But with AI, there’s a different calculus.

Going forward, we'll require an entirely new way of thinking about intellectual property in a world where the tools for creation are so widely available. This is an area that urgently needs regulatory or judicial guidance—if ownership of AI outputs is clouded, many people will simply stop using the tools.

Questions companies should ask:

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Get in touch:

Are you building in the AI guardrails space? We want to talk. Reach out to our investing team by contacting anna@m13.co and morgan@m13.co.

Local government is arguably the most impactful layer of government in terms of daily living, overseeing fundamental services from public transit and snow removal to EMS and fire departments.

Despite overseeing such invaluable services, the sector is struggling. Local governments have seen over half a million job losses since the beginning of the pandemic three years ago, while more than one-third of remaining government employees are considering quitting their jobs—largely due to stress, fatigue, bureaucratic overwhelm, and burnout.

Polimorphic is looking to change that, harnessing the power of AI to ease government workers’ administrative load so they can focus on the human-driven work they do best. In a notoriously manual and paper-heavy space, Polimorphic integrates with governments’ existing tools and websites to digitize manual processes and help constituents more easily navigate local services.

“I’m sure a lot of folks have seen the TV show Parks and Recreation, and it’s not an entirely inaccurate depiction,” says Co-Founder & CEO Parth Shah. “Municipal government is full of your local Leslie Knopes and Ben Wyatts—folks trying to do the best work they can for their community. By automating hours of busywork, we’re helping them do just that.”

Polimorphic is already in action in cities like Danbury, CT, St. Albans Town, VT, and Prospect Park, NJ—and it’s adding a new city or county every two days. Since launching its AI-powered search solution last month, its waitlist has grown to 40+ cities across the country.

The company’s raise comes on the heels of an executive order calling for safe, secure, and trustworthy artificial intelligence solutions, as well as several pieces of AI legislation circulating around the Capitol this session—signals of the government’s increasing readiness to understand and make the best use of AI technology.

"Inefficiency is an expensive pain point in any bureaucracy, and this is particularly true for government,” says M13 Partner Latif Peracha. “Polimorphic’s solutions digitize every facet of the constituent-to-city relationship. Parth, Daniel, and their capable team are helping constituents and departments spend less time on inefficient paperwork and focus on enhancing their communities, removing trillions of wasted dollars and time out of the system.”

Polimorphic’s AI search tool aggregates local governments’ information to help constituents answer questions and locate resources—without spending hours clicking through web pages.

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The company also has a personal connection to its mission.

“My grandfather worked in local government as a utility director—managing water, utilities, sewage—and I saw the lengths he would go to to provide people with these fundamental needs,” says Parth. “And when I worked at a smart city startup, I saw how these tech advancements were sort of overlooking the needs of local governments. At Polimorphic, we are bringing these advancements, such as AI, to cities and counties across the United States in a way that is built specifically for their needs.

He adds, “It's a big motivator, knowing that this is something that my grandfather would be excited about.”

Polimorphic CEO Parth Shah with his grandfather.

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We’re proud to lead the $5.6M seed funding round to Polimorphic, investing alongside our peers at Shine Capital and Pear VC.

From our attendees:

Showing support for underrepresented founders means not only opening up your checkbook, but your address book, and introducing them to the people who have the knowledge and expertise to help them grow their business. Sometimes you really just need that expertise—whether that be legal, financial, go-to-market strategy. We don't know it all, so we need to have access to the people who do.

—Gigi McDowell, Fêtefully Founder

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The connections that we've gotten here from M13 and Everywhere VC are a huge support in themselves. Networking events like this not only broaden your horizon, they give you ideas on how to execute your vision as a company and help you out in revenue. [Events like this] are where we’ve gotten some of the contacts for our biggest clients.

—Miko Lorenzo, Probiotic Labs Co-founder

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All the people I've talked to today are super approachable, which is very different from standard institutional investing and other VC firms. Being able to have one-on-one conversations with people and ask very honest questions was something I really loved about this experience.

—Diana Tan, Brief Founder

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Many founders today are overlooked and underestimated, regardless of their talent. Too often, the spaces where founders can connect and grow cater toward a narrow type of founder. Data from Diversity VC finds that VC-backed startup teams are disproportionately men (89.3%), white (71.6%), and Ivy League educated (13.7%).

We believe that all talented founders should have access to the advice, networks, spaces, and communities they need to refine their ideas and build stronger companies. That’s why at LA Tech Week this year, M13 partnered with our friends at BBG Ventures and Everywhere Ventures (The Fund) to host our first “Office Hours for Underestimated Founders” event at our Los Angeles office.

“We want to be accessible to a wider audience than the ‘traditional’ founder pipeline,” says M13 Partner & Head of Propulsion Lizzie Francis, a former founder herself. “We’re inspired by creativity and bold thinking, and we know that underestimated founders can also be some of the strongest founders.”

She goes on, “We also know founding and operating companies is hard, and every day founders are expected to wear a lot of hats. That’s why we decided to team up with other firms to offer our time, expertise, and connections.”

BBG Ventures Principal Investor Claire Biernacki, M13 Partner & Head of Propulsion Lizzie Francis, and BBG Ventures Head of Platform Amber Quiñones at the M13 office in LA.

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“One of my first jobs was in finance, and I was the only female on our investment team—so I've experienced that kind of underrepresentation firsthand,” says Claire Biernacki, Principal Investor at BBG Ventures. “Having access to mentors outside of my day-to-day role has been really helpful for me throughout my career.”

At the event, we hosted 39 pre-seed and seed founders who sat down one-on-one with mentors from M13, BBG, and Everywhere, meeting in 30-minute sessions to get concrete advice from people who have been there before.

One of the hardest parts of being a founder is not having personal experience in the many different areas where you’re expected to operate—and VCs can help fill the experience gap, so founders can focus on the things they do best. Alongside mentors from BBG and Everywhere, our M13 mentors included several former founders, like Partners Anna Barber, Lizzie Francis, and Rob Smith and Director of Product Mary Lara.

“We’re giving these founders the best advice we possibly can, with no strings attached,” says Rob. “A lot of events talk through best practices. But I prefer this style: sitting down side-by-side and practically talking through the toughest challenges and most exciting ideas, with the freedom to give really raw feedback.”

LA Tech Week also marked M13 Partner Anna Barber’s announcement of PledgeLA’s “50 in 5” commitment—a pledge to support investing 50% of all LA VC dollars in underrepresented (Black, Latinx, and female) founding teams by 2028.

“We believe strongly that in order to build the future that we all want, we need to include everyone, we need to include the full community, and that future has to be built by founders that look like everyone,” says Anna.

Nearly 3 in 5 American adults suffer from a chronic condition such as asthma, kidney disease, diabetes, or cancer, and as the leading cause of death and disability in the US, chronic disease drains a staggering 90% of the roughly $4.1 trillion in annual healthcare spend. Despite this, chronic disease is massively underdiagnosed and undertreated, driving huge healthcare costs and unnecessary complications.

This gap in the healthcare system became deeply personal for Kanishka Rao when his grandfather succumbed to previously undiagnosed chronic kidney disease. In response to this tragedy, he and his father Dr. Bharat Rao co-founded Carenostics, a revolutionary AI platform for identifying chronic disease patients and prompting treatment.

Partnering with health systems, Carenostics’ AI-powered platform automatically ingests provider EHR data to identify and prioritize opportunities for earlier interventions around chronic diseases, activating clinicians to intervene with guideline-directed medical therapy (GDMT). The company is setting the stage for a data-driven healthcare revolution, envisioning a future where every diagnostic and treatment decision is personalized using patient data and AI.

In healthcare, you are constantly looking for an alignment of incentives. Carenostics offers an elegant solution where everyone wins: Health systems improve quality of care and reduce physician burden, payors avoid costly complications, pharma companies get life-saving therapeutics to more patients, and most importantly, patients live healthier and longer lives.

Source: Carenostics

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Diagnostic applications of AI have historically fumbled for several reasons, including models that rely on overly narrow datasets that limit the number of patients identified, or alerts built on overly general rules that cause systems to flag too many patients. Carenostics is tackling these challenges by leveraging the entire patient EHR (structured and unstructured) and tailoring its AI technology to each health system it serves. Using AI to risk stratify chronic disease patients, Carenostics’ platform also helps providers avoid alert fatigue for more targeted and effective patient outcomes.

The company has already seen strong traction with health systems and pharma: Carenostics has been deployed at leading health systems including Hackensack Meridian Health—the largest hospital system in the state of New Jersey, with 17 hospitals and 6 million patient records—and other partnerships include AstraZeneca, the VA, and a partnership and investment from Bayer G4A.

As investors, we are excited to support a team so uniquely suited to execute on complex AI technology and integrate with health systems. Carenostics has built a world-class team that includes more than five AI PhDs; leaders from Siemens, McKinsey, ConcertAI, Cerner, and Amazon; and AI pioneers that previously developed the world’s first AI and natural language processing (NLP) solution deployed within EHRs at 300+ health systems.

Co-founder and COO Kanishka Rao founded and led McKinsey’s US Healthcare Startups practice, and Co-founder & CEO Dr. Bharat Rao is easily one of the top five AI healthcare experts in the world. His deep experience includes leading Healthcare and Life Sciences AI & Analytics as a Partner at KPMG, a decade-long tenure as head of Healthcare AI & Precision Medicine at Siemens, over 150 published peer-reviewed papers, 67 analytics-related patents, and one book.

Left to right: Carenostics Co-founder & CEO Dr. Bharat Rao, M13 investor Morgan Blumberg, Carenostics Co-founder & COO Kanishka Rao, and M13 Partner Latif Peracha

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“Most people with a chronic disease find out they have one too late,” says Kanishka. “Our goal is to stop the story of my grandfather from repeating itself, ultimately improving healthcare outcomes and reducing costs.”

The future of healthcare is proactive, not reactive, and Carenostics’ use of clinical AI holds the transformative power to overhaul our industry by tackling the costly and life-threatening delays in diagnosis and treatment.

We are proud to lead Carenostics’ seed round and invest alongside Greatpoint Ventures, Gaingels, Kurt Hilzinger, Chairman of Humana, Dr. John Glaser, former CEO of Siemens Health Services, and Professor Srini Devadas, Edwin Sibley Webster Professor of Computer Science at MIT. We look forward to seeing the enormous benefits this technology can provide to both patients and providers.

Over the last 18 months, the contrast between bleak macro signals and growing optimism around technology breakthroughs has reached new heights.

Below, we share some of our observations about the world around us—and how they inform our approach to investing and portfolio management at M13.

Our venture philosophy

Sitting here in September 2023, we believe this is a tremendous time to be making venture capital investments.

Aversion to loss is a basic human condition. Athletes often say the pain of losing is greater than the joy of winning, and this is true in VC too, despite loss being a significant part of how this asset class performs (35% of investments typically go to zero). At M13, we understand that challenging macro conditions are not just unavoidable, but healthy: headwinds can provoke necessary resets and ultimately create a stronger ecosystem.

With capital tightening, company mortality will continue to rise, freeing up talent and dollars for new opportunities. Exceptional founders are not worried about rates (they will go down) and multiples (they will expand). And 2023, 2024, and 2025 will be tremendous years to make seed and Series A investments given the technological breakthroughs we are living through (more on these below).

Regardless of cycles, a few of our investing philosophies remain the same:

We need to invest in the exceptional.

It’s not enough for a founder to be smart or a company to be a minor improvement in a crowded space; we’re only interested in backing exceptional founders who are bringing true innovation to their market (or creating an entirely new one). We don’t get excited about incrementality.

The juice has to be worth the squeeze.

We seek the superlative outcomes that come from backing exceptional founders creating market leaders. We lose even when a company works but its scale and ambition aren’t big enough.

Great products ≠ great businesses.

It can be easy to fall in love with a great product as an end user, but an investor mindset requires thinking beyond the product to evaluate business models, capital intensity, delivery mode, cash management, and headwinds and tailwinds.

We believe in a wide path to great returns.

We respect the power law and believe the majority of our returns will be driven by a select number of investments. We also believe we can generate additional value through our active approach to portfolio management

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How we got here: the macro landscape

While we are not macro economists, we do pay close attention to the public markets, key economic indicators, and important cultural shifts that shape our society.

Here are a few of the major macro and industry events that have taken place since the beginning of last year:

Rates go up: The Fed begins to raise interest rates to combat inflation, which peaked at 8% after over a decade of quantitative easing supercharged by a once-in-a-century global pandemic. As of today, interest rates have grown 525 bps since March 2022.

Savings go down: The consumer savings rate drops to 2.7%—the lowest level since 2005.

Musk buys: After months of waffling and legal back-and-forth, Elon Musk completes a $44B deal to purchase Twitter.

FTX falls apart: The failure of crypto platform FTX becomes one of the biggest VC-backed failures in modern history, losing some $9B of customer funds.

AI blows up: OpenAI launches generative AI tool ChatGPT and breaks the record for the fastest-growing app by reaching 100M users in less than 2 months.

Twitter slashes: With CEO Elon Musk newly at the helm, Twitter lays off roughly half of its workforce—ushering in months of unprecedented industry-wide layoffs across tech (including more than 20,000 layoffs from Meta and 12,000 from Alphabet).

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TSwift tours: Taylor Swift begins her record-breaking Eras Tour, which is projected to gross more than $2.2B.

Banks crumble: Four major bank failures rock the tech industry: Silicon Valley Bank, Signature Bank, First Republic Bank, and Heartland Tri-State Bank, upending nearly $570B AUM.

Venture slumps: Quarterly global venture funding reaches a new 12-quarter low, hitting its lowest levels since Q2’20.

‍Apple resurfaces: Apple announces its spatial-computing-based Apple Vision Pro headset—the company’s first major product announcement in 9 years, since announcing the Apple Watch in 2014.

Multiples lag: Q2’23 SaaS multiples stabilize at ~6x, down from ~20x in late 2020.

Messi scores: World Cup winner Lionel Messi moves to MLS, and in a first-of-its-kind contract will receive a revenue share of subscriptions to MLS Season Pass on Apple TV+.

Looking back, while we couldn't predict some of these events—particularly these cultural movements—the overall market correction is something we predicted a while ago. Our 2019 letter to investors acknowledged that the historically long bull market of the 2010s would not last. We were a few years early, but ultimately, the correction arrived.

But today’s conditions are no more everlasting than yesterday’s. Core inflation is back under 4%. Although travel and experiences remain expensive, air travel has returned to pre-pandemic levels, and in March, Las Vegas reached a new monthly high for visitors. It turns out human desire for connection and experience is unshakeable, and the rebound from years of staying put and staying apart has been strong (just look at how hard it is to get Eras Tour tickets).

Beyond the Fed, one of our biggest combatants to inflation is AI productivity. In coming months, innovations in this space should drive down costs and make things cheaper. Developers using AI coding assistants code 50% faster, while AI designers cost about a penny to create images that would cost $150 in human labor.

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These tools are poised to lead to a generation of new outlier companies and great VC returns—reminding us all yet again that tougher days ultimately create the most enduring businesses.

The tech layoffs of the last year also mark a major shift in the workforce: a huge number of experienced operators are now on the job market. Equipped with ever-expanding AI productivity tools, these workers represent a new class of potential entrepreneurs—and investors should be paying attention to the potent tech and talent combination happening in this moment.

Where M13 invests and why

At M13, we invest in technologies shaping the future of work, health, commerce, and money.

While our heritage is in consumer technologies (2015 vintage investments include Lyft, Ring, ClassPass, Daily Harvest, and Rothy’s), we shed that label long ago. Over the last two years, more than half our investments have B2B business models. As customer acquisition for B2C companies has become more challenging, we’ve moved deeper into the tech stack to focus on enabling technologies selling to businesses.

In e-commerce infrastructure, we have invested in Pietra, Rebuy, and Max Retail, all of which service brands (not end users). Some of our fastest-growing fintech investments have been in companies like Rho and Ampla, which serve the middle market and CPG companies, respectively. Canvas Medical is focused on the intersection of clinicians and developers.

We are also excited about new companies in a theme we are calling “consumerization of government.” Upwards offers child care benefits to Fortune 500s and government employers, benefiting from the tailwinds of government childcare subsidies; Prepared brings a connected multimedia solution in public safety, targeting municipalities and corporations; and Polimorphic is building the first Constituent Relationship Management (CRM) software for local governments.

Our belief is that M13 portfolio companies can expand markets. We are constantly looking for the early tailwinds that will propel our founders forward. We invested in bitcoin infrastructure company Lightning Labs (2019) long before the Lightning Network was discussed on CNBC, and in telehealth weight management clinic FORM (2021) well before Ozempic was common dinner table conversation. We invested in local meal delivery platform Shef (2019) and the aforementioned Upwards (2022) based on regulatory and cultural tailwinds that have accelerated those businesses and given them the chance to be market leaders.

We’re compelled by the tailwinds created by frontier technologies like AI and blockchain—and we get especially excited about how they intersect within our vertical focus areas. We’ve already invested in several AI-powered solutions and actively seek out opportunities to back the next generation of founders building with this transformational technology.

The exponential power of horizontal technologies

We agree with macro investor Raoul Pal when he calls this moment “the exponential age,” a new era defined by transformative technologies that drive exponential progress. AI and blockchain are well on their journeys through the hype cycle, and these powerful underlying technologies are playing a significant role in our portfolio and approach to investing.

Inspired by Gartner's hype cycle.

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We believe both present very compelling areas to invest—although we are mindful of where each of these technologies sits in its respective hype cycle and of the mania and valuation creep that comes with the top of any hype cycle.

Artificial intelligence

As investors in AI, we focus on vertical applications with clear use cases and strong data advantages, as well as critical infrastructure platforms to support the growing application layer.

In the long run, we are preparing for a future where agent automation is possible, and AI can autonomously execute more complex multi-task processes.

In addition to exploring the impact AI is having on productivity, we are also looking for companies focused on prediction and provenance.

Prediction — Today, AI is already used in causal and predictive models to forecast the future. Combined with the power of generative features, we believe this power will become embedded in everyday workflows and products. In finance, AI will enable automated alternative underwriting and fraud response. In healthcare, traditional ML models can be used in conjunction with new generative features to facilitate early disease detection (see our company Carenostics) and treatment pathways—for example, notifying physicians of early signs of sepsis vs. the common cold and prompting treatment plans.

Provenance — What will generative AI mean for artists and creators? While Nick Cave may think the ChatGPT’s interpretation of his catalog “sucks," Holly+ embraces the possibilities of generative AI for artists, and singer Grimes is allowing musicians to leverage her likeness (“GrimesAI voiceprint") in exchange for a royalty split pending her approval. There will also be questions around high-fidelity, unauthorized content, and IP holders will have to decide: will they help distribute these projects to capitalize on them, will they ignore them, or will they try to end them?

We’ve seen the impact of AI across our portfolio, from companies explicitly creating AI products, to those that leverage it to power other offerings, to those using AI tools to improve their own operations:

• Canvas is using AI to help doctors scale up high-quality care and avoid insurance headaches
• Carenostics leverages AI to pinpoint individuals at risk for chronic diseases, empowering medical practitioners to make more accurate and timely diagnoses
• Hearth AI envisions agentic network management as the next generation of the CRM, centralizing, enriching, and prompting recommendations and actions across users’ personal networks
• Play auto-generates code as users design mobile-optimized applications
• Polimorphic offers software that automates constituent services for local US governments
• Rebuy is a commerce AI company that provides intelligent recommendations and personalized shopping experiences for consumer brands
• Rho is offering AI-powered invoice and bill processing to clients, using AI to digitize invoices

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Blockchain

We haven't forgotten about crypto, web3, and blockchain. The immutable records of blockchain may be used to differentiate between AI and human expression, and concepts of governance, ownership, and tokenization which will be critical as we think about copyright.

The need for trustless, decentralized technologies is clear. Stablecoins and digital money are a massive use case—with a global stablecoin market cap size of $124 billion—and have clear product-market fit in emerging markets. Pakistani retailers use stablecoins to hedge against fluctuations in the rupee, something common across developing economies. Beyond emerging markets, Solana’s integration with Shopify allows businesses to make payments with stablecoins for fractions of a penny.

The themes of decentralization and open protocols will be even more vital as blockchain and AI begin to intersect. Our company Lightning Labs has recently enabled AI to send, hold and receive Bitcoin, which will help AI exchange value in a single denomination at a global scale.

We’re also interested in bringing real-world assets on chain. For example, M13 company Nori's carbon credits marketplace fixes significant accounting and transparency issues that have plagued the carbon market.

And let’s not forget: crypto is one of the best performing asset classes of 2023, with Bitcoin market cap growing 57% YTD. BlackRock CEO and previous crypto skeptic Larry Fink has called Bitcoin an “international asset,” arguing digital asset technology could “revolutionize finance.”

Questions remain. Can crypto expand beyond financial use cases? When and how will it intersect with AI? Fred Wilson’s post on the freedom to innovate is a great call to arms.

The road ahead

At M13, we are spending the time to understand the specifics of these fast-moving technologies as well as taking steps to be sensitive to their market timings and positions in the hype cycle.

Ultimately, we measure ourselves by the impact our portfolio companies have on the world around us, which drives distributions to our limited partners. The tectonic shifts taking place in technology and talent right now indicate this is indeed a golden time to invest and drive significant impact for years to come.

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We are actively investing in the current market. Read about some of our latest investments here.

If you are a founder and the themes in this letter resonate with you, please reach out to latif@m13.co.‍

Diverse workforces benefit from broader perspectives, wider talent pools, better product development, and increased financial outperformance. But unconscious bias can prevent companies from creating inclusive teams and cultures, becoming a blocker as early as the hiring process.

In our experience, startups making early hires often fall into one or more common bias traps, from evaluating candidates based on vague “culture fit” criteria to relying on inherently biased AI screening tools to make decisions. Taking the time to thoughtfully understand these problems and implement a structured hiring process can help teams avoid missteps—and create a positive flywheel effect that yields the benefits of a more diverse organization faster and more effectively.

“Once a team decides to fully commit to a structured interview process, so many good things start to happen: interview teams are aligned and more confident, they assess talent better, candidates have a superior experience, and the icing on the cake is that it significantly reduces bias,” says M13 VP of Talent Acquisition Loren Boyce. “More often than not, interview teams are surprised to see that even though they are spending more time at the beginning of a search to create structured interview plans and aligning their teams, they end up hiring faster.”

Below, we highlight a few of the most common places bias can creep into the recruiting process—and advise on how to avoid them.

At the end of the day, our old assumptions don't yield the talent businesses really need. If you actually want to have the best talent and stay competitive, then you have to begin to question your assumptions.
‍Shavar Jeffries, KIPP Foundation CEO at M13 Future Perfect 2023

Overly rigid qualifications

The scenario: Discouraging candidates who don’t meet 100% of listed qualifications.

Why it’s a problem: Women and other candidates from historically marginalized communities are less likely than men to apply for roles unless they meet all the qualifications. This limits the range of inbound applications and inhibits meaningfully screening for candidate abilities.

How to do better: Include language in your job description that acknowledges this reality and encourages people from underrepresented groups to apply. At M13, we look to hire as much for future potential as for past experience, and we include this blurb at the end of our job descriptions:

Referral overreliance

The scenario: Relying only on referrals to source and hire candidates.

Why it’s a problem: It’s easy to just ask friends and colleagues for referrals, especially when you don’t have a full recruiting team in place. But this likely means missing out on huge networks of talent. We tend to know people who are similar to us, thereby inherently limiting the potential diversity of our top-of-funnel candidates. This leads to self-perpetuating teams of similar people hiring similar people.

How to do better: Actively source candidates who aren’t in your immediate networks. Post opportunities on social channels and share across multiple job boards. Even before hiring, focusing on building a diverse network and connecting with a broad community will help you cultivate a more diverse talent community to tap into when the time comes.

Lack of structure

The scenario: Not having a structured interview and evaluation process.

Why it’s a problem: Without structured procedures in place, interviews and evaluations lack consistency, leading different candidates to be evaluated based on different criteria.

How to do better: Agree on a structured interview process from the start with specific people assigned to specific tasks. Our DEIB checklist for startups can help you start taking the right steps toward setting up a recruiting process that is more organized, equitable, and effective.

Narrow field of search

The scenario: Relying only on a few keywords for diverse recruiting, such as searching exclusively for HBCU graduates.

Why it’s a problem: By limiting the scope of your search, you are competing with other hiring companies and relying on an inherently limited pool of talent. For example, HBCUs represent only 3% of all four-year nonprofit institutions, and they are geographically limited to the South and East, which is limiting for hiring teams not based in those regions.

How to do better: Expand boolean keyword searches to include other organizations or memberships dedicated to supporting members of underrepresented groups. Even better, form partnerships with organizations and pipeline programs that support talent from underrepresented groups to have access to their networks.

The ivory tower

The scenario: Making “top-tier” university pedigree a requirement.

Why it’s a problem: This unnecessarily creates barriers to entry and a false scarcity problem: everyone has a different definition of what “top-tier” might mean, but fewer than 0.5% of U.S. undergraduates attend an Ivy League school. That means you’re leaving a lot of talent behind.

How to do better: Spend time with your team to get clarity on the “why” behind a role, then focus on defining the specific skills needed to be successful in this role. Remind interviewers to be open minded about what experiences and other qualifications may add up to these skills, rather than looking for general markers of prestige. Tools like interviewing.io can be a useful resource for creating a more effective interview processes.

Culture fit vs. culture add

The scenario: Assessing candidates based on “culture fit.”

Why it’s a problem: “Culture fit” is a vague standard often used to disqualify candidates that are unlike existing individuals already at the company—meaning that solving for “culture fit” will introduce bias against people who are different.

How to do better: Clearly articulate qualifications that are relevant to the way work gets done at your company and assess them in a systematic way. Reframe “culture fit” as “culture add” to highlight the importance of diversity throughout the hiring process. Just as it is important for candidates to have a growth mindset, it’s important for organizations to believe they have the ability to coach and mentor someone who may not be a 100% fit today. Look for ways in which new candidates can expand and improve your existing culture, while still remaining true to core values.

Token interviewer

The scenario: Having someone who would not typically be on an interview panel join because they are from an underrepresented group.

Why it’s a problem: The employee who is joining is spending a disproportionate time on interviews in comparison to their peers, potentially inhibiting their ability to do their own work. They are also unlikely to be the best person to authentically represent the role and firm.

How to do better: Be mindful of who is asked to join interviews. Ensure that the true diversity of the firm is reflected throughout the interview process, and be honest about where there are opportunities for growth vs. artificially inflating perception by asking certain employees to bear an unfair burden.

Final stage representation

The scenario: Not having enough people from underrepresented groups moving through the funnel, especially at the finalist stage.

Why it’s a problem: Research has shown that when there is only one individual from an underrepresented group in a finalist pool of four, their odds of being hired are statistically zero because their differences from the majority of the group were made more salient.

How to do better: Before moving forward with finalist interviews, ensure there are at least two individuals from underrepresented groups who are a part of your slate of candidates.

Unchecked AI

The scenario: Using HR AI screening tools without oversight.

Why it’s a problem: AI tools are only as good as the data and algorithms they are trained on, and those often have bias built in (such as penalizing resumes with words like “women’s,” as in “women’s career development group” or “women’s lacrosse captain”).

How to do better: Never exclusively use AI tools to categorically pass through or reject candidates. Have a human backstop that is able to check biases that may appear in the process.

Get in touch:

If you're passionate about championing DEIB principles and have innovative ideas to share, we'd love to hear from you! Join our talent community and be a part of the conversation that's shaping the future of startups and diversity. For more information, reach out to talent@m13.co.‍

In recent years, conversations around how to integrate diversity, equity, inclusion, and belonging (DEIB) principles into the workplace have grown exponentially. The consensus? It’s hard work, and there’s no silver bullet—but it’s vital for creating healthy, productive, and engaged workforces.

Today’s startup ecosystem is far from representative of today’s consumer populations: VC-backed startup teams are disproportionately men (89.3%), white (71.6%), based in Silicon Valley (35.3%), and Ivy League educated (13.7%), according to data from Diversity VC. While there’s work to be done on the investor side, founding teams can also help create a more representative tech ecosystem by institutionalizing DEIB early on—and unlike larger companies that struggle to tackle institutionalized diversity challenges, startups can set the right course early and grow their efforts as they scale.

At M13, we believe it is critical for startups to embrace DEIB as early as possible. More diversity at companies leads to broader perspectives, increased innovation, expanded market share, improved product development, and access to a wider pool of talent. The business case is clear: increased gender and ethnic diversity are correlated with increased likelihood of financial outperformance, per McKinsey, and today, 100% of Fortune 100 companies have publicly committed to DEIB initiatives.

Below, we lay out the strategic steps startups can take to build DEIB principles into their hiring and culture. While we don’t expect every company to start doing everything immediately, we believe the culmination of these efforts will create a positive flywheel effect within your organization—and prioritizing DEIB today will yield the benefits of a more diverse organization faster and more effectively.

It's not about adding diversity for the sake of diversity, it's about subtracting homogeneity for the sake of realism.
Mary Robinette Kowal, author

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Before hiring: Building a foundation

Facilitating diverse and inclusive hiring begins long before your team actually needs to hire. In short: you can’t neglect thinking about diversity and inclusion and then expect a broad range of candidates to magically appear when you publish a job posting; you need to put in the effort ahead of time. Early focus on building a diverse network and connecting with a broad community will help you cultivate a more diverse talent community to tap into when the time comes.

When it is time to hire, you want candidates to feel a sense of psychological safety when entering your workplace and meeting the team. This needs to be in place before you ever post a job description, or you’re setting candidates—and yourself—up for a sub-par experience.

To hire in alignment with DEIB principles, your team needs to know what those principles are. This means that your founding team needs to get together to clarify what DEIB means to your company and how each person can be clear on and accountable for upholding these values.

A productive conversation begins with acknowledging that bias exists and has a clear impact on the hiring process (such as judging candidates based on assumptions drawn from their name or alma mater). Awareness of these biases is not enough; the important part is knowing how to combat them. Consider unconscious bias training (at M13, we hold this annually), which can help your team better understand:

Dedicating time and resources to team education will pay dividends in building a strong company culture.

What does it look like to center people at the margins? If you decide to redesign your talent or hiring systems to center single moms, you’re going to hire differently. If you start redesigning your promotion system to include people who don’t have a business degree, you’re going to promote differently. Once you start to redefine the systems that you were taught, you can think differently, hire differently, develop differently.
Channing Martin, IPG Global Chief Diversity & Social Impact Officer at M13 Future Perfect 2023

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During hiring: Structuring an equitable process

Implementing a structured interview process helps eliminate bias, foster fairness, and ensure alignment among interviewers. Properly training interviewers and defining interview steps and rubrics for evaluating candidates leads to more objective assessments.

The good news is that setting up this process once, especially when you’re just starting out, enables you to scale and grow in a sustainable and intentional way—saving small teams time and enabling you to hire better and faster over the long run.

Here’s a checklist for setting up a structured–and more effective—hiring system:

Align with your team on the specific traits and abilities needed for a job description

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Run the job description through a gender decoder to ensure gender neutral language

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Widely share and post the job description, including actively posting to job boards that can surface the role to candidates outside your immediate network

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Use the job description to develop a scorecard that is standard across all interviewers

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Choose interviewers who will be part of the potential new hire’s day-to-day experience and can authentically highlight the diversity of your firm

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Choose an advocate from the management team to be responsible for ensuring everyone is doing the right thing for candidates, from application review to the final debrief

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Prepare and circulate a pre-brief highlighting the job description, candidate scorecard, and questions each interviewer is expected to ask

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Take the time to train your interviewers to be objective and consistent

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Complete a pre-interview eligibility screen with the candidate before their first interview to ensure that timing, salary, and eligibility to work in the country align

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Ask each interviewer to take detailed notes and submit their feedback within 24 hours of the interview without discussing it with any other interviewers beforehand

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Ensure that candidates from underrepresented groups are included at each stage of the hiring funnel before moving on to the next stage

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Throughout hiring, we also recommend researching which tools—like interviewing.io and BrightHire—can make your interview processes more inclusive and bias-free.

Above all, don’t rush the process. In our experience, hiring teams are eager to fill roles and leap into onboarding, but the single most important thing a startup can do to ensure they’re getting the best person for the job is giving the process time.

At the end of the day, taking a little bit longer to hire the right person will be better for your organization than hiring the wrong person quickly.

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After hiring: Ongoing efforts to create an inclusive work environment

DEIB efforts neither start nor stop at hiring: they need to be actively built into all aspects of company life.

At M13, we believe that in order to effectively embrace DEIB, leaders have to fully live the values that they agree to in all aspects of their work. That’s why we proactively offer our portfolio companies training and workshops around leadership development, compensation leveling, feedback sessions, and more.

Data and accountability are also crucial. In the words of M13 Partner and Head of Talent Matt Hoffman, “What gets measured gets managed. Setting concrete metrics and goals around DEIB elevates the priority of the conversation and ensures accountability. It’s never too early to put these goals in place.”

Setting concrete metrics and goals around DEIB helps hold your team accountable, even when the work becomes hard. These goals don’t have to be hugely aspirational, just measurable—such as ensuring that a minimum number of candidates from underrepresented groups are included at each stage of the hiring funnel before moving on to the next.

In thinking through the metrics you want to set, ask:

Actively championing DEIB from the inception of your company is mission critical. By building DEIB into the foundation of a company, you are setting up a positive flywheel where diversity begets diversity—resulting in stronger company culture and results.

Get in touch:

If you're passionate about championing DEIB principles and have innovative ideas to share, we'd love to hear from you! Join our talent community and be a part of the conversation that's shaping the future of startups and diversity. For more information, reach out to talent@m13.co.

From the calculator to the computer, new innovations have always brought on anxiety about the human workers they might displace—but time and time again, innovation has resulted in an explosion of technical jobs that leverage these new tools.

Generative AI has been in the headlines for months now, with much hand-wringing about how these technologies will upend the job market. Despite the doom and gloom about job displacement, we find ourselves at historically low unemployment. And in fact, some studies have found that the industries most exposed to AI disruption have seen an uptick in employment in recent years.

We believe that while some rote tasks will increasingly be automated, AI innovations will also open up new areas of opportunity across the workforce. Vitally, understanding these new technologies will be paramount to the jobs of the future. In the words of IBM Chief Commercial Officer Rob Thomas, “AI may not replace managers, but the managers that use AI will replace the managers that do not.”

Below, we dig into what AI in the workplace will look like today, in the near term, and in the distant future—and the questions companies should be asking to prepare for this sea change.

Are you a founder innovating in the AI space? We want to talk. Drop our investing team a line at morgan@m13.co or anna@m13.co.

Careers of today, tomorrow, and the next generation

What does AI in the workplace look like? We dive into how AI tools will impact job functions across industries, from engineers to designers, across three distinct time horizons.

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What are the implications of this technology?

The impact of AI will evolve alongside its technological progress, with important ramifications for individual workers, team managers, and the workforce at large. Here are some to keep in mind.

Today

Not too distant future

Next generation

What questions should companies be asking?

Smart companies need to ask smart questions in order to prepare for the impact of AI in the short and long term.

Today

‍Not too distant future

‍Next generation

Industries to watch

What key industries will be disrupted? (Other than all of them.) At M13, we invest in the future of work, money, health, and commerce. Some of the verticals across these categories that will see AI-driven disruption include:

Entertainment

• Game design automation
• AI-driven characters and gaming assets
• Animation generation and voice generation
• Video production and editing

Art & design

• Web and mobile application design and development
• Architectural design
• Clothing design
• Music generation
• Art generation
• Creative writing

Sales & marketing

• Prospecting and outbound
• RFP process
• Generating personalized content for marketing segments
• Generating marketing assets
• Summarizing product improvements
• Voice and visual sales clones

Retail & commerce

• Inventory management
• Demand generation
• Dynamic pricing
• Customer service chatbot

Healthcare

• Disease diagnosis
• Personalized clinical decision support / care plans
• Documentation admin (e.g., prior authorization)
• RCM automation (e.g., coding and billing)
• Automated care delivery

Human resources

• Candidate screening and prospecting
• Job description and interview automation
• Training and development
• Performance analytics automation

Finance

• Fraud detection
• Financial advising
• Automated tax filings

Legal

• Research summarization
• Contract drafting
• Discovery process automation
• Automated negotiation
• Outcome prediction

General work productivity

• Automating customer research
• Presentation generation
• Automating business intelligence and summarizing conclusions
• Personal assistant for email, scheduling, web actions
• Generative networking agent for managing relationships

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The future of human work

While recent headlines have focused on potential job loss due to the adoption of AI, the World Economic Forum forecasted that the advent of automation will actually create 58 million highly skilled jobs over the next few years—and add 5% to the US GDP. As with prior innovation cycles, strategic leadership work will become even more important.

As humans are freed up from all of this paper pushing, productivity-oriented stuff, we're going to be freed up to do things that only humans can do.
Adobe Chief Strategy Officer Scott Belsky at M13’s Future Perfect 2023

Here are some areas where we will continue to need humans, and need them more than ever:

Every technological innovation can ultimately advance the quality or depth of the work that humans do—and AI is no different. Today, we have the opportunity to retrain workers who were formerly doing things that AI can take over in order to elevate the entire workforce.

At M13, support for our founders goes much deeper than writing that initial check. Virtually every VC with a platform team helps portfolio companies with basic recruiting and network introductions, but we’ve built something deeper: a proactive, operator-powered system with expert partners that help our early-stage founding teams drive success. We call this system Propulsion.

“Propulsion is a fundamentally different model from virtually every other venture platform I’ve seen,” says M13 Partner Rob Smith, a former founder himself. “It’s a new model for holistic startup support.”

Our research (as cited in TechCrunch) has found companies with more executive experience require 33% fewer years and 34% less capital to exit—resulting in an 81% greater IRR for investors. But even the most seasoned founders have expertise gaps, and stretched resources at the early stage means they don’t always have the time or money to fill these gaps on their own. M13 helps provide an expertise advantage, filling in executive experience gaps for early-stage companies as they scale.

Flexspace founders with M13 Partner Karl Alomar

Pietra founding team with M13 investor Morgan Blumberg, M13 Partner & Co-founder Carter Reum, and M13 Partner Brent Murri

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Propulsion offerings start with productized resources with demonstrated success that we refine and improve with each use. They also include longer deep-dive projects. By applying what we learn from helping one company to how we help others, we can punch above our weight in terms of the impactful support we can offer our founding teams.

“Platform doesn't work if it isn’t structured or delivered correctly,” says M13 Partner Karl Alomar. “That’s why we’ve honed in on building repeatable processes and resources—like M13 Labs and M13 Portfolio Portal—to make Propulsion truly effective at scale. By being process-oriented and proactive about helping our portfolio companies, we can offer much more impactful support.”

We are winning deals because of our Propulsion resources.
–M13 portfolio company founding team on the Propulsion impact on sales

Where Propulsion can fill in the gaps

All of our M13 partners have deep operating backgrounds, and many have been founders themselves. We also have experience helping startups navigate myriad crises (e.g., financial corrections, PR crises, the Covid-19 pandemic) to help them reach successful outcomes and exits in any environment.

In a traditional partner-centric venture model, an investing partner works individually with multiple founders in the portfolio. In our founder-centric model, our founders have access to multiple M13 partners, depending on their operational expertise needs at a given time.

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We help founders identify where they need this expertise as early as the due diligence process, where we highlight gaps in the business that may keep them from reaching their next milestone. Some areas where Propulsion assists our founders include:

‍Product — Helping founding teams strategically plan, build, and deploy their product offerings to ensure they find product-market fit as quickly as possible and build sustainable best practices as they grow.

‍Fundraising — Helping teams prepare for successful fundraising by identifying what milestones they need to hit prior to their next raise; advising on successful storytelling for an investor audience.

‍Growth & business development — Helping teams craft a strong go-to-market strategy; tactically leveraging the M13 network of BD and sales leaders to make strategic introductions and fill the top of the funnel with qualified leads.

‍Talent — Helping teams with hiring, managing, and org planning; pairing teams with resources for executive recruiting, applicant tracking, and external search firms; offering training modules to strengthen team leadership and communication.

‍Brand, content, and PR — Helping teams develop their brands and strengthen their brand storytelling, visual design, and content strategy; preparing companies to create newsworthy thought leadership and build media relationships.

‍Data — Helping founders identify where their most useful data is located, build out quality data stacks, and conduct data analyses that help them improve their metrics (e.g., raising customer lifetime value, lowering customer acquisition costs, building a more targeted UX geared toward their most valuable users).

‍Operations — Helping founding teams identify and work toward their most impactful milestones (e.g., fundraising, product launches, key hires) and make decisions across legal, finance, and org management.

M13 Partners Lizzie Francis, Rob Smith, and Win Chevapravatdumrong with the Propulsion team at an M13 x Mantis LA Tech Week event

Visor founding team with M13 Partner & Head of Data Rob Olson

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Repeatable, scalable, powerful: Portfolio Portal & M13 Labs

Having a repeatable high-growth tech playbook is vital for M13 to scale our support of a growing portfolio. Propulsion drives value across the entire portfolio, from lighter touch products (e.g., templates, best practices resources) to more bespoke support (specific deep-dive projects).

One resource available to all of our portfolio companies is our new M13 Portfolio Portal, launched just last month. In our first month we've fielded over a dozen portfolio company pipeline requests, making targeted and personal introduction requests for our portfolio.

The Portfolio Portal allows our portfolio members to:

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This is amazing—exactly what we have needed. To be able to scan the M13 network against our key target accounts is so useful.
—M13 Portfolio Portal user

This year, we also launched M13 Labs, which allow our team to efficiently identify a company’s strengths and opportunity areas across product, brand, data, and more. Through Labs projects, we dive into a company’s products and processes to highlight the most impactful areas for improvement.

Labs is a quick, repeatable, and productized process where learnings from one company can be applied to others. It’s also a benchmarking tool that allows founding teams to see how they compare against their top competitors (and over time, against their former selves as they grow). And Labs aren’t only for our current portfolio companies; we also use them in our Phase One due diligence process to help us make better decisions as investors.

M13 founders chat with certified professional coach Jerry Colonna during our virtual coaching series (2020)

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The 'Phase Two' thesis

We believe good investing happens across three phases:

1. Creating the portfolio — Selecting the right businesses and the right founding teams to support.

2. Managing the portfolio — Driving growth, strategy, performance, and outcomes at portfolio companies.

3. Monetizing the portfolio — Realizing the value of portfolio companies to return money to investors.

At M13, we recognize that this second stage is incredibly important. Rather than making an investment and then sitting and waiting, we seek to truly shift outcomes for our portfolio and drive maximal value by meaningfully engaging at the second stage.

We see the core drivers that help companies become successful—product, data, talent, finance, brand, go-to-market strategy—as levers that founding teams can pull to create stronger companies. Our goal is to help companies operate more efficiently, grow faster, and exit more successfully. M13’s Propulsion engine and team helps founding teams achieve the critical milestones, gain the actionable insights, and make the invaluable connections necessary to accomplish this.

M13 Partner & Head of Brand Christine Choi with FORM Founder & CEO Evan Richardson

WeeCare CEO Jessica Chang with M13 Partner Anna Barber

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B2B procurement—the process of sourcing goods and materials from vendors—is notoriously complicated, opaque, expensive, and slow. Procuring furniture, fixtures, and equipment (FF&E) in the commercial construction industry can be especially complex, making this $500B market subject to long lead times and unpredictable fees and delays.

Enter Source, a B2B marketplace that connects architecture and design clients to suppliers. Source is building the essential managed marketplace to bring together architects and designers, building owners, and commercial FF&E suppliers—making for a more streamlined purchasing process.

Source already has the largest FF&E catalog in the world and is a known brand in the space—and it’s still just getting started. There are over 65,000 architecture and design firms in the US, and Source is on its way to becoming an integral part of their workflows.

With Source’s integrated search platform, commercial architects and designers can both build their FF&E plans and make purchases for large-scale construction projects. Designers can peruse thousands of inventory items in the Source library, create lookbooks, set budgets, automatically create purchase orders, and see lead times all in one place. On the supply side, suppliers can communicate with buyers, update stock availability, pricing, and lead times, and facilitate transactions.

With Source, 1000+ line item purchase orders that used to take a week to compile can be finished in minutes. The Source product team has also begun integrating AI into its product recommendation engine and plans to launch an automated design assistant.

Today, Source is servicing hundreds of projects across hospitality, office, multifamily residential, and commercial spaces. While each vertical has its own nuances, procurement can cause headaches across the space for both new builds and renovations, making Source a widely needed resource.

As investors, what got us most excited about Source was the effusive customer feedback that we got from owners, architects, and designers across all of these categories. The customers we met sang Source’s praises—praises backed up by strong engagement data—and nearly every other designer or architect that we met with asked for an immediate introduction.

One reason for this enthusiasm is CEO Nicole Schmidt. When we first met Nicole, we were immediately impressed with her insight into the construction industry at large and design specifically. Her deep customer empathy and optimism that technology can create a better experience for everyone involved in the construction process has led her and the entire Source team to create a business that we knew we had to support.

We are proud to have led Source’s $8.5M Series A, investing alongside our friends at Rogue Venture Partners, Oregon Venture Fund, Rise of the Rest, and Founders’ Co-Op. Notably, Source’s earlier investors have all been local to the Portland and Seattle ecosystems—and now, M13 is happy to represent Los Angeles and New York as we help Source continue its national expansion. To the entire Source team: we are grateful for your decision to partner with M13, and we can’t wait to get to work.

Key takeaways

If you decide to redesign your talent or hiring systems to center single moms, you’re going to hire differently. If you start redesigning your promotion system to include people who don’t have a business degree, you’re going to promote differently. Once you start to redefine the systems that you were taught, you can think differently, hire differently, develop differently.

—— Channing Martin, IPG Global Chief Diversity & Social Impact Officer

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At the end of the day, our old assumptions don't yield the talent businesses really need. If you actually want to have the best talent and stay competitive, then you have to begin to question your assumptions.

— Shavar Jeffries, KIPP Foundation CEO

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What you hired for in the past is not what you need to hire for in the future. We're seeing rapid evolution in what great talent looks like and how you find it. It’s not just about credentials, but about the person and their skills.

— Matt Hoffman, M13 Partner & Head of Talent

The talent of tomorrow

Future Perfect is M13’s thought leadership series, where we convene investors and founders to reflect on the lessons and innovations that inform how we will build the future. In May, we gathered in New York City to hear from the vanguards of technology, innovation, and investing.

“The way things have always been” isn’t the way they’ll be tomorrow. The economy of the future will require a workforce of the future, and we have the opportunity and responsibility to shape that today.

Shavar Jeffries (KIPP Foundation CEO) and Channing Martin (IPG Global Chief Diversity & Social Impact Officer) sat down with M13 Partner Matt Hoffman to discuss how we can move away from outdated talent practices and make the workforce of tomorrow better reflect the consumers of tomorrow.

Developing talent starts with K-12 education

“When we think about the workforce of the future, we have to make sure that every American child has access to it,” says Shavar Jeffries, head of the KIPP, America's largest network of charter schools. “We’re leaving too much talent on the margins of our country, because some kids simply don't have the opportunities that others have.”

Rectifying that begins with how we fund public education. Right now, public schools are generally funded by local property taxes—which are affected by inequity, redlining, and other.

“If you fund your public schools accordingly, you’re just going to reproduce the inequity in property valuations in your public education system,” Shavar explains. “This country will not be able to serve the demand of tomorrow’s workforce if we leave literally millions of young people on the backside of opportunity because we're not making the investments in K-12 public education that we ought to.”

In addition to reexamining how we fund opportunities for students, shaping the talent pipeline of tomorrow will require thinking about how we build leaders much earlier on than we do right now. Intentionally focusing on building inclusive leadership early on will pay dividends when students enter the workforce later on.

“We have to think differently about building inclusive leadership really early on. “We often skip that stuff until you show up in the workplace,” says Channing Martin, Global Chief Diversity & Social Impact Officer at IPG. “It’s just not a conversation we're having in primary education right now—but that is the point when you can really affect the future and create a new framework for what effective leadership looks like.”

The way Channing sees it, the first day on the job is also too late to start learning how to interact with people who are different from you. “No matter what industry you’re in, you want to hire folks that can have culturally relevant conversations. And I don't think that those skills should be taught on the job; they really should be taught ahead of time,” beginning with elementary education.

Centering the margins

As Head of Talent at M13, Matt Hofman helps build out not only M13’s talent and culture, but the talent strategies across our portfolio companies. “What you hired for in the past is not what you need to hire for in the future,” he says. “We're seeing rapid evolution in what great talent looks like and how you find it. It’s not just about credentials, but about the person and their skills.”

Shavar agrees: “Oftentimes, our assumptions really aren't interrogated [to hire] in a way that's really connected to the competencies you need for a job.” The desirability of a candidate is based on outdated metrics—did they go to an Ivy league school? Do they know anybody in this industry? Have they demonstrated that they have a handle on the unspoken social rules unrelated to the actual work?

One way to stop punishing employees for not being part of a homogenous culture is to center people at the margins, rather than building people systems that cater to the people who have historically dominated the workforce.

“What does it look like to center people at the margins?” Channing asks. “If you decide to redesign your talent or hiring systems to center single moms, you’re going to hire differently. If you start redesigning your promotion system to include people who don’t have a business degree, you’re going to promote differently. Once you start to redefine the systems that you were taught, you can think differently, hire differently, develop differently.”

Building systems that work for people at the margins—rather than those who have historically been at the center—benefits the entire organization. Employee benefits policies that cater to single parents will also be more beneficial for partnered parents. Development systems that aren’t built to promote executives’ personal favorites will allow talent to show through more effectively across the company. Hiring systems that aren’t artificially pegged to educational pedigree will allow teams to hire for what actually matters.

“I bust the myth all the time that diverse talent doesn’t exist,” says Channing. “That’s just not true. And we have the skills, the tools, the resources, and the access to meet people where they are and find talent that doesn't necessarily look the way that we're used to.”

Inclusive practices have also been shown time and time again to boost bottom lines. “To me, it’s not just a moral conversation,” Shavar adds. “At the end of the day, our old assumptions don't yield the talent these businesses really need. If you actually want to have the best talent and stay competitive, then you have to begin to question your assumptions.”

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Thank you to our speakers

Shavar Jeffries has been an advocate for social justice and educational equity for more than two decades. He joined the KIPP Foundation as CEO in January 2023, a culmination of his many years as a champion for KIPP schools. Shavar was founding board chair of KIPP Newark in 2001; joined the KIPP Foundation Board in 2019; and is a proud KIPP parent, as his two children graduated from KIPP Spark Academy and KIPP Team Academy in Newark. As a first-generation college graduate, he understands implicitly the life-changing power of a high-quality education.

Prior to joining the Foundation, Shavar was President of Democrats for Education Reform (DFER) and its affiliate organization, Education Reform Now, where he led the organization in passing over 100 policies at the federal and state level that expanded educational opportunities for low-income students of color. Throughout his career, Shavar has practiced law, worked as an assistant attorney general in New Jersey, and served as the elected president of the Newark school board.

Shavar graduated from Duke University and Columbia Law School, where he concentrated on civil rights law and policy. He has been recognized broadly for his work—by the NAACP, the National Bar Association, and the Congressional Black Caucus, among others.

Channing Martin is IPG’s Global Chief Diversity and Social Impact Officer. In this role, she is responsible for advancing IPG’s diversity, equity, and inclusion objectives and continuing to strengthen IPG’s progress toward being one of the world’s most diverse and inclusive companies.

Reporting to the CEO, Martin leads IPG’s strategy on all diversity-related matters, including the continued diversification of IPG’s senior ranks and talent pipeline and partnerships with IPG’s full network of agency brands, CEOs, and DE&I leadership community. Martin supports the advancement of social impact strategies and practices alongside the leadership of IPG’s integrated ESG team.

Prior to joining IPG, Martin was Chief Diversity and Social Responsibility Officer of CSG, working across the company to promote and build effective strategies for DE&I. She was also responsible for ESG initiatives. Martin previously held the positions of Diversity and Inclusion Manager at the Federal Reserve Bank of Chicago, Diversity Lead and Strategic Planner for the US Department of State, and the Diversity Recruitment and Assessment Manager for the US Office of Personnel Management.

Martin holds a BA in economics from the University of Pittsburgh and an MS in Public Policy and management from Heinz College at Carnegie-Mellon University.

Thank you to our sponsors

Key takeaways

Fragmentation of care is a really big problem, and communication is a really big problem. If people need to work in teams to deliver effective care, they need effective communication tools.

— Dr. Florencia Halperin, FORM Chief Medical Officer

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The software [a healthcare team] uses to make their decisions every day is the most effective way to close the gap between theory and practice.

— Andrew Hines, Canvas Medical Founder & CEO

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We’re seeing health systems throughout the US going through large digital transformations, where they’re moving from many disparate point solutions over to platform solutions.

— Milind Parate, Ventures for Northwell Holdings Managing Director

The human-centered future of healthcare

Future Perfect is M13’s thought leadership series, where we convene investors and founders to reflect on the lessons and innovations that inform how we will build the future. In May, we gathered in New York City to hear from the vanguards of technology, innovation, and investing.

Many would agree that today’s healthcare system isn’t working—for patients or for providers. Under the heavy weight of the Covid-19 pandemic, intensely bureaucratic paperwork needs, legacy data systems, and long hours, care providers are reporting record levels of burnout. In turn, patients are receiving less effective care.

But innovative technologies are shaping, healing, and breaking our existing healthcare systems. How do we establish a healthcare system that’s more humane on both sides of the care equation?

Dr. Florencia Halperin (FORM Chief Medical Officer), Andrew Hines (Canvas Medical Founder & CEO), and Milind Parate (Ventures for Northwell Holdings Managing Director) sat down with moderator Brandon Fenn (Cooley Partner) to discuss the human-centered future of healthcare.

Vital signs: The state of health tech innovation

The panel opened with the question: If you could take the “vital signs” of the healthcare industry right now, what would you see?

Milind Parate, Managing Director of Ventures for Northwell Holdings (a branch of New York’s largest healthcare provider), began by highlighting the trend of declining margins and rising operating costs at hospitals and provider centers, especially post-pandemic.

“This is largely attributed to the workforce challenges that health systems are facing, whether it's physician burnout, nurse burnout, staffing shortages, or expenses associated with flex staffing, as well as supply expenses and increasing drug prices,” he explains. “All of these pieces are contributing to hospital operating margin compression.”

In response to this pressure, “we’re seeing health systems throughout the US going through large digital transformations, where they’re moving from many disparate point solutions over to platform solutions,” Milind continues. “As a result of this environment, there’s increasing scrutiny around the return on investment that new technologies can bring to the table as well as integration costs, implementation costs, navigating change management, and what the processes are for these tech companies to seamlessly come in.” Hunger for smoother systems and more updated technology means the industry is eager for new solutions but that eagerness is balanced by a need for these companies to prove their value.

In addition to educating providers on how to valuably integrate their offerings, health tech players also need to educate patients. This era of research, innovation, and expanding access to healthcare brings potential for both progress and misunderstanding.

For example, when it comes to weight management, “the advice to just work out more and eat less is old fashioned and puts blame on individuals,” says Dr. Florencia Halperin, Chief Medical Officer at FORM, a virtual comprehensive obesity medicine telehealth clinic. “When we started out, nobody knew what Ozempic was, and now it’s on the front page of the newspaper all the time. This has been a tremendous opportunity to educate people about what we've known for a very long time, which is that obesity is a disease, a chronic medical condition which needs to be treated that way, and there are a lot of tools for doing that. Unfortunately, a less positive effect has also crept in, which is this idea that you can just buy a prescription [to lose weight].”

Tech for teamwork

One major theme of the conversation was that healthcare doesn’t depend on a single provider’s knowledge; it’s a team effort.

“Fragmentation of care is a really big problem, and communication is a really big problem,” says Florencia. “If people need to work in teams to deliver effective care, they need effective communication tools to deliver effective care. We get care in lots of different places, and the sharing of information presents barriers to delivering and receiving effective care.”

These communication breakdowns are part of the problem Canvas Medical is trying to address with its healthcare platform, which includes electronic medical record (EMR) management, a payments platform, and software and API tools for developer teams at healthcare institutions.

“Standards of care have to evolve—but I think that the rate at which they evolve is just devastatingly slow,” says Andrew Hines, Canvas CEO. “The reason why medical records are so important is not to record information but to support decision making and advance the standard of care a whole lot faster. Medical record technology is important because it is a proven solution to a widespread and serious problem: unwarranted variations in care.”

Unwarranted variations in care are when there are differences in care across patients that can't be explained by the patients’ disease or preferences, Andrew explains. They can be a result of everything from under-resourced clinical teams, to improper training, to unconscious bias or health equity issues. Factors like the time of day an appointment is scheduled can have a major impact on a patient’s health and care journey, despite not being directly relevant.

According to Andrew, “There’s huge opportunity here, and an enormous body of evidence that the software [a healthcare team] uses to make their decisions every day is the most effective way to close the gap between theory and practice” to provide more effective care.

Investing in the future

From a venture angle, Milind offers a perspective from the other side of the health tech ecosystem. “We’re always looking for technologies that address what my colleagues [Florencia and Andrew] are talking about,” he says. But in this economic environment, “there's been much more discipline in terms of how we're looking at technologies and whether or not we should bring them into the broader ecosystem.”

One area of focus is “obviously, AI and generative AI,” Milind says. Elements of this technology are already being incorporated into healthcare, be that through medical imaging or through using natural language processing (NLP) to seamlessly feed patient data into medical records to smooth patient intake and communication between providers.

In addition to integrating facets of AI into health technologies, Milind also notes, “elements of health equity, social determinants of health, and looking at socioeconomic factors—all of that’s going to empower the patient and drive the consumerization of healthcare and patient-centered care. It’s all interconnected.”
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Thank you to our speakers

Dr. Florencia Halperin is the Chief Medical Officer at FORM, a virtual obesity medicine clinic. She has dedicated her career to clinical care and research on the most effective ways to help people lose weight to improve their health. At FORM, Dr. Halperin leads an expert clinical team in the delivery of high quality medical care for people living with obesity.

Prior to her work at FORM, Dr. Halperin was the co-founder and co-director of the Brigham and Women’s Center for Weight Management and Metabolic Surgery, as well as the Chief of Endocrinology at Brigham and Women’s Faulkner Hospital, both of Harvard Medical School. Dr. Halperin has been the recipient of numerous awards in recognition of her dedication to teaching and to patient care, including Castle Connolly America’s Top Doctors and the Schwartz Center Award for Compassionate Care.

Dr. Halperin completed medical school and clinical training in endocrinology at Harvard Medical School.

Andrew Hines is a statistician, programmer, and clinical informaticist. In 2015 he started Canvas Medical, the first care modeling company. In 2014 he helped build one of the largest real-time healthcare analytics products while serving on the data science team at Practice Fusion. In 2010 he built the analytics team at Nor1, which introduced new scheduling technologies to the hospitality industry and was later acquired by Oracle.

Andrew has Bachelor's degrees in statistics and decision sciences from San Francisco State University and a master's degree in management science and engineering from Stanford University. He lives by the Pacific Ocean with his wife, a Family Nurse Practitioner dedicated to vulnerable patient populations, and their two sons.

Milind Parate is Managing Director of Ventures for Northwell Holdings, the venture investment arm of Northwell Health, where he is responsible for the group’s direct venture investments and potential commercialization opportunities across new business and joint ventures.

Mr. Parate has 20+ years of healthcare sector experience across venture capital, startups, public equity investment research, and investment banking (corporate finance, M&A), having spent time in therapeutics, healthcare services, and the digital health/health technology verticals.

Mr. Parate received his BA in economics from the University of Chicago and his MSc in health policy from the London School of Economics.

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